I find myself having a hard time getting my head around making all the D&D races the same. In the real world, I understand the truth that we are all human beings and are all equal with varying talents and abilities. In a D&D setting, however, I always saw it as being purposefully DETACHED from the truths of reality. And in this regard, each race was made purposefully unique. By blending everything together and mellowing out the "viva la difference" there no longer seems to be any special "cool factor" since you can basically get the same traits no matter who you play. Is this just me?
I am all right with them substituting the word "race" for something else (species, folk, etc), but I see what you mean. I am all for diversity, and I do think there is some problematic and stereotypical portrayals of certain "races", even the human ones (such as those who are "Asian"). But this can be rectified with research and descriptions that don't stem from racism.
For non-human "races", I guess it goes back to the ancestry and cultural thing, but I do hope they keep the "flavor" of each race. I'm not saying this means keeping all orcs evil savages, I just mean keeping the culture of that "race". Elves have a culture, dwarves have a culture, etc. Going back to the culture and ancestry, this could mean that a halfling raised in a dwarven community is going to act more "dwarvish", likely worshiping dwarven gods, speaking dwarvish, etc.
We're all people, but we come from different cultures and backgrounds, so I hope they apply this to D&D as well. Make it inclusive, but also highlight what makes each ethnicity or culture (or "species") unique. I don't mean "exotic" or "special", just...how they tick. What they believe, what their cultural practices are, etc. After all, cultures in the real world make the world that much more fascinating!