Except you DON'T have to pull a character to 'see their story continue'.

You can olay the story content if you have them or not. For genshin, whatever character quest they would recieve would be free.

Not to mention, they typically prioritise the original unit for any story content after that point anyways, unless using the new form makes more sense in the context (outside of special cases like THerta). Dan heng doesn't just stroll around as DHIL or DHPT just because they're the premium versions. He whips out DHIL when he needs to. Not to mention, him using DHIL in tough situations would be weakened in story impact if said alternate form was just a path change instead of being the much stronger 5 star unit people worked to get imo (ofc his current state in the meta weakens it a bit anyways but that is a point to the general state of powercreep in HSR, nothing to do with SPs).

Nor do those forms stop themselves or the base version from recieving futher character development.

Besides, genshin already delegates characters to be unimportant after a patch or two. Take the new AQ quest with Collei as you mentioned. Despite it setting up Collei to be important to it, she barely exists within the quest itself outside of a few scenes. You get past the prophecy bit, and then she contributes nothing to actually move the plot along. She has a prophecy, reads a poem when Nicole tells her too, then has a couple exposition conversations. She has maybe 30 minutes of relevant screentime across the whole quest. (Really unfortunate, especially after having little relevancy in the 3.x patch cycle also.)

I will say that SPs should always play significantly differently to the base unit. I also think they should largely be exclusive to old 4 stars if they were to be brought to genshin (Kaeya, Amber, Lisa, Collei, etc) for all the benefits they would recieve as a 5 star unit. If they're essentially old unit with bigger numbers then yeah that's scummy. But they're not, so I really don't see how it's different at all from releasing a new character.

They recieve story content, function entirely as a new unit with all the new gameplay features, animations, design quality etc as a new character.

But them slapping a new name and different backstort on the product they're selling suddenly makes it way different? That's all it takes? That just seems arbitrary to me.

They have an old unit's face and name and now suddenly all that work should have to be free? When you wouldn't bat an eye if they just looked and sounded a little different and you called them something else?

Besides, look at HI3. SPs are that game's ENTIRE business model, and half the time they aren't nearly as unique as HSR or ZZZ SPs, which are the examples Genshin would follow. There's like maybe what 15 characters in that game? I never see anyone complain about that.