So, how was initiative changed?
Before EA started, original intention was that initiative will be calculated for whole groups, rather than individuals ... and then, party that had more, acted first (whole) ... then the other party (whole) ... and first party again ... and so on and so on ...
This ofc presented several problems, tho.
For example ... i highly doubt any group was able to overoll WHOLE Goblin camp.

So they decided to go to individual intiative rolls ...
Wich (just by the way) works exactly the same way, they just no longer count together for whole party, as they did before.

Anyway, from your description of person moving trough enemies frozen in time ... i would dare to presume this is completely unrelated to your topic.

There is still one problem in your logic tho:
Stealth has been a broken mess and the topic of many discussions since launch and for years its many problems have gone unaddressed.
This was demonstrated to the whole world during the last PFH.
Just by this itself, you can gather one thing ...
That it "works" exactly by design.
After all, you said it yourself, there was many, many, many, and once more many, other topics about this ... none of them ever got any atention.
Personaly, i dare to presume that Larian checked gathered telemetry ... wich contains data from quite litteraly millions of players, from wich many had several playtroughs ...
And seen how much people is using this feature ... wich would most likely be a lot.
One cant really blame them to get the idea, that people just like it this way.

So ... in short, hope for mod.
I doubt you get anything better.
