If Tesla truly delivers a ten time as safe as human full self-driving on AP2 sensors (plus HW3 computer) and regulators will insist a driver remains in seat, I would see that as off the hook. I would also personally accept that as FSD delivered in my car.
There's a contradiction in your scenario: if Tesla's FSD in let's say Jan 2021 were really 10x better than the average human driver, then it would also surely pass any regulatory test with flying colours, hence be already licensed for driverless operation.
The only logical reason regulators would refuse to allow removal of the human overseer/crutch is if the system performed in general well, but failed miserably in testing for those infrequently-occurring edge/corner cases Tesla cannot be bothered to cover, such as my Firetruck Super-Destruction test under current AP [which for clarity, an average human driver will pass in 10/10 randomly-timed tries, but current AP fails on each occasion].
i.e. Tesla would have continued along the same slip-shod trajectory from current AP development to produce a system which superficially covers most of the required functionality to qualify as L5 FSD, but which remains fundamentally unsafe while performing a mundane driving task [not piling into obstacles at high speed] in the instance which pops up once every 10,000 miles [a leading vehicle moved aside at just the wrong moment on motorway], thus lulling users into an even more treacherous false sense of security than presently, due to the system's wider versatility.
Naturally no government in its right mind should allow such a lethal trap on the public roads, nor tolerate a company to do business in such a cavalier fashion, recklessly running the risk of its customers lives and those of third parties.
OTOH I understand why you would be willing to accept this, as in "something that mostly works is better than nothing", but still it is not what we were sold, so there is no good reason to settle for being short-changed. Which is not to say that it would not be useful to have such a more versatile Monitored Self-Driving system in the interim while still awaiting the eventual arrival of true FSD.
In my opinion though Tesla will have to upgrade all cameras and radar on the car to about x4 current resolution, restore the rear corner radars originally designed for, possibly also add a forward LiDAR and have the HW4 mainboard inserted before FSD will work in a fundamentally safe and reliable fashion which will gain approval for driverless general road use in Europe.
Which will, judging by their arthritic progress to date, be in 2025 at the earliest.