I get the concern, but I don’t think direct in-kind return works cleanly in a pooled borrow/lend system.
A displayed spot balance is not a specific coin in a segregated box. If users have 100 BTC of claims but only 2 BTC remains, who gets that 2 BTC? First movers? BTC depositors pro rata? What about borrowers, cross-margin accounts, and liabilities tied to the same market?
This is why I think the recovery-token approach is probably more fair than trying to return remaining assets in-kind. It is not perfect, and current funding is still far too low, but at least it gives affected users a consistent claim instead of arbitrary winners and losers.
Separately, affected users should be paying attention to this Insurance fund split:
User-owned Insurance fund should be returned. But protocol-owned IF is different, and we should mobilize to get that portion verified on-chain and considered for recovery. That could add real capital to the recovery pool without breaking trust with user IF stakers.