The miners who begin this attack will of course want to keep what they've taken so they won't be sending back to addresses held at a "3" or "bc" which would be incredibly stupid.

SegWit “anyone can spend” donations can only be taken on the legacy protocol chain as they’re rejected by the Core protocol. To take (i.e. spend “anyone can spend”) donations and then spend them back to an “anyone can spend” address (so that they can be spent by other miner) would be nonsensical indeed.

They will send them to non-segwit addresses.

Indeed.

This will drain hundreds of thousands of bitcoin within a few hours to the legacy chain pumping up the value of the legacy chain while draining the value of the soon to be forked chain.

There’s no draining. Seems there’s something amiss in your conceptualization. From the moment the first SegWit donations is spent without a private key, the legacy chain has forked and all the SegWit UTXO are the future property of the miners (as many donations can fit into each block). The private key hodlers for those SegWit addresses can still spend their Bitcoins on the Core blockchain (if blocks are ever found which may not be the case after it plummets), but they will never be able spend them on the legacy protocol chain.

What drives up the value is that all those donations as rewards will cause the hashrate mining the legacy chain to skyrocket, because each block will have not just a 6.5 BTC reward but perhaps 1000s of BTC per block reward. This is what will drive the Bitcoin price to $2 million very quickly after the attack begins. I blogged about this in Precisely Why Bitcoin Is Re-accelerating. Remember the stock-to-flows valuation model is based on the cost of minting new Bitcoins. So if only 6.5 BTC are minted in each block, but the cost of mining the block has catapulted due to the massive donations reward for mining a block.

The Bitcoin Core can never recover because the miners must leave to mine legacy for the greater income and also because the difficulty will be stuck so high that the Core protocol chain will never find 600 blocks and reset the difficulty. The Core developers might eventually be forced to manually fork to reset the difficulty, but then this would never again be respected as a resilient and decentralized cryptocurrency. Also the reputation will never recover after the price has loitered ~$0 for weeks or months, and destroyed most of the exchanges and destroyed most of the Bitcoin ecosystem such as Bakkt futures, etc.. All those fools have their Bitcoin stored in non-legacy addresses.

The elites won't have to worry about the transparency of the base layer. Only those of us with no connections to power will have to worry. So the rest would be kicked off into LN or other chains assuming they survive.

You do not mean electrical power but apparently rather you mean political power. You seem to be claiming for example the elite can exempt themselves from the FATF regulation I posited?

I'm still wondering though what will happen long term as history has shown that a single currency would be an anomaly. What if an alt season returns and it avoids the legacy BTC chain and heads over to something like Monero? If capital controls are in place, how many services are you willing to pay for online that cost more than a fraction of one's physical needs?

If the state isn't able to seize the means of production in time, the risk of a privacy coin taking over BTC as the main unit of account increases. I suspect we will have two worlds, one surveillance based digital panopticon ruled by some future Amazon government entity, and those few outside (the 144,000?).

Criminality (aka free market) will increase with the economic collapse coming to Western civilization. Criminals (e.g. drug dealers) need anonymous cash, unless perhaps if food becomes money and Western civilization falls back to another Dark Age (but seems unlikely civilization would fall that far that quickly).

Note Monero isn’t anonymous, it’s a honeypot.