It almost was. S&P decided against it at the last minute, despite saying they would initially.

Yes

Index and other funds are forced to buy as their contractual mandate is to follow the index or methodology set out by the fund.

So you are saying it could have been worse, and therefor it is not that bad. I feel like this may be a logical fallacy.

It is like saying that the worst thing about twin earthquakes in Venezuela was not the fact that there were two of them, because there could have been three.