In short: I agree with some ideas of the proposal, but not fully agree with the proposal.
It is true that the wording "Using rest moments less frequently is acceptable" is pretty vague to the point that whoever that reading this for the first time will not be able to figure that the consecutive 1/1 pattern is one of the acceptable alternatives. Some clarification would be nice indeed.
However, as stated by various people here already, I believe that 2x1/1 would be sufficient to always acted as a proper substitute rest moment. Imagine that we have 5 minutes map, Muzukashii difficulty without 3/2 rest moment anywhere but only 2x1/1. That would make that Muzukashii difficulty become heavily closed to Oni difficulty which the guidelines suggested the mapper to apply 1x1/1 rest moment, while being a lot far from Muzukashii which apply 1x2/1 rest moment.
My suggestion is to keep the current guideline as it is, but add one more paragraph for it. Like this:
Ranking Criteria - Muzukashii difficulty wrote: p1u5m
At least 1 rest moment that is 3/2 or longer should be inserted after 16/1 to 20/1 of continuous mapping. Using rest moments less frequently is acceptable if either the pace of the music makes rest moments counter-intuitive or if the continuously mapped part is overall more forgiving to the player.
Or alternatively,
At least 1 rest moment that is 3 consecutive rest moments that are 1/1 or longer should be inserted after 16/1 to 20/1 of continuous mapping. This can not be applied for longer than 64/1 continuity of mapping. Using rest moments less frequently is acceptable if either the pace of the music makes rest moments counter-intuitive or if the continuously mapped part is overall more forgiving to the player.
This wording expected to let the mapping become like this:

(*The number 64/1 could be discussed later if we want to proceed with my proposal. In maximum, this could goes to 128/1 in my opinion.)
Q: What is the difference between Hivie's proposal and my proposal?
A: 2x1/1 changed to 3x1/1, and set the limitation of the maximum continuity of mapping that 3x1/1 can be applied.
Q: God, why this limitation?
A: To balance the difficulty strain between Futsuu - Muzukashii - Oni. Since the strain from 3x1/1 or 2x1/1 is approximately closer to Oni difficulty (1x1/1) and while being too far from Futsuu (1x2/1). A mix of use between consecutive 1/1 rest moment and 3/2 rest moment should be made. And in the end, neither 2x1/1 or 3x1/1 can reduce the strain of mapping like 3/2 or longer.
Q: Why the limitation has been set to 64/1 continuity of mapping?
A: I found that in most of the music, kiai or chorus would run for 64/1. I believe that it's possible for the mapper to find 3/2 gap or longer before/after the kiai/chorus. 64/1 is usually a measure for "one whole section of the music" as well. The complete absence of 3/2 rest moment or longer would potentially affected the strain of the difficulty, especially for the longer beatmap (>3 mins map).
Q: With your proposal, can't I use 1x2/1 as a substitute rest moment anymore?
A: No, you can still use it for the "intense part of the music" - and it would be up to BN and NAT discretion to judge that if it's fair or not - like usual.
-----
In the end, this sounds complex. But, I personally believe that if we want to stated the usage of consecutive 1/1 rest moment into the Ranking Criteria, this may be the best option in my opinion.
I may sounds absurd here. But, what do your guys think about this?