The problem is existentials, or rather the existence of existentials without the ability to explicitly override them. Even in Haskell, overriding typeclass instances requires turning off orphan checks, which is a rather large hammer.
So once you've identified this, now you might consider the universe of possible solutions to the problem. One of those solutions might be removing existentials from your language; think about how Scala would work if implicits were removed (I haven't used Scala 3, maybe this happened?). Another solution might be to decouple the whole concept of "existential implementations of typed extension points" from libraries (or crates, or however you compile and distribute code), and require bringing instances into scope via imports or similar.
Two things are true for sure, though: libraries already depend on the current behavior, whether that makes sense or not; and forcing users to understand coherence (which instance is used by which code) is almost always a giant impediment to getting users to like your language. Hence, "orphan rules", and why everyone hates Scala 2 implicits.
Yep, familiar with all of this.
That said, I would love to see a solution in my favorite class of solution: where library authors can use and benefit from this, but the average user doesn't have to notice.
I tend to think that the non-existential Scala system was _so close_, and that if you _slightly_ tweaked the scoping rules around it, you could have something great.
For example, if - as a user - I could use `.serialize(...)` from some library and it used _their_ scoped traits by default, but if I _explicitly_ (named) imported some trait(s) on my side, I could substitute my own, that'd work great.
You'd likely want to pair it with some way of e.g. allowing a per-crate prelude of explicit imports that you can ::* import within the crate to override many things at once, but... I think that with the right tweaks, you could say 'this library uses serde by default, but I can provide my own Serializer trait instead... and perhaps, if I turn off the serde Cargo feature, even their default scoped trait disappears'.