TheRock also brings up a good point. The barrier to KDs isn't the number of players but the number of leaders. You think that the people getting booted out of KDs that can maintain 25 active players would be willing to join up with leadership in mid tier KDs? I think your logic is a bit flawed there, if there is good leadership, players will follow and join. If leadership sucks/inactive/lazy to find 25 people then no matter how low you reduce the KD size people will leave because the leadership sucks or isn't to the players standard. Therefore the numbers you presented are misleading, this isn't a number crunching change. Everything that everyone here has argued is all based on a different set of conjectures and situations that we each believe is most likely to happen.
@Luc, assuming 0 new KD creation (I believe very few KDs will be created through this), yes there would be more full KDs but how would that be any different from now where 20 prov KDs can war 22 or 18 prov KDs, they still war within their NW range, so if they have less prov's that means each prov should have a greater NW per prov and vice versa. So in the end it is all based on activity. If capped to 20, yes the playing field would be a bit more even, but by how much? So in essence you are arguing that this change will create more new KDs and your banking on the fact that monarchs that are currently incapable of finding 25 players will all of a sudden become much better monarchs with a full 20 prov KD.
In the end if you want more war targets, then get bigger or smaller, it will be more or less the same when its capped to 20 provs. The SKDs will still be out of range with 20 provs and the ghetto's will still be out of range with 20 prov KDs.