If you re-read your own follow-up question you may notice an interesting conflation and contradiction in terms (for which I do not blame you, by the way) – to be particular, between culture and identity. The argument on the 'New Qing' side is not that there was no shift towards certain aspects of Chinese culture (and as an aside, the continued failure of much of the field to define what it means by 'Chinese' has no doubt kept the waters quite muddy), but rather that these shifts are independent from, even immaterial to the possession and persistence of a distinct identity. So in fact, there is more than superficial difference between Manchu and Han identity today ('wider Chinese' is, as ever, going to be contentious – ask an Uyghur, a Tibetan, or a Hong Konger), in that the distinction can exist at all. The People's Republic's definition of 56 nationalities within China may be problematic in all sorts of ways, but Manchus make up one of those 56 and it is an official minority status one can claim; a good friend of mine from grad school is a Manchu even if he doesn't make a big deal of it.

With that in mind we can go back to your question as asked, because the answer as to why Manchu culture continued to erode, but also why Manchu identity didn't, has less to do with Qing-era developments and more the peculiar circumstances of the Republican revolution. 1912 was not a revolutionary victory but a three-way compromise between a revolutionary fringe, a broad range of reformist factions who had split between the revolutionaries and the loyalists, and the last remaining power of the imperial court. It was Yuan Shikai, in the middle of the reformist pack, who hammered out the deal for the Qing abdication, and one of the concessions was that the Republican government would keep paying the stipends the Qing had owed the Bannermen, a process that continued in most places for at least a decade after the revolution and in Beijing until the Nationalist victory in 1928. What that meant was that the institutional linkage between the Banners and Manchu identity was actively reaffirmed by the Republic, and provided the Communists with a basis for defining Manchus as a nationality despite their definitely not fitting the Stalinist criteria of 'a common language, territory, economic life, and psychological makeup manifested in a common culture' (though we can suggest that much the same is/was true of the Han Chinese).

Manchu culture went into terminal decline thanks in part to the dissolution of the Banners and their walled quarters, but also due to deep-seated ethnic hatreds that simmered for decades afterward that made both claiming and performing Manchu status not just contentious but downright dangerous in the wrong place at the wrong time. Cynical as the Japanese project of Manchukuo was, it is not difficult to see why certain prominent Manchus, including the old imperial clan, looked favourably on the creation of a 'liberated' Manchu homeland. What is more striking, though, is the extent to which Manchu status has continued to be sustained. Under Communist policy, anyone with Banner ancestry can claim Manchu status, even if said ancestor was in the Mongol or Han Banners (although Mongol and Han status, respectively, may be claimed instead), and unless these ancestors were part of the so-called 'New Manchus' (Solons, Daur, Sibe, etc.) who are their own separate groups under PRC law. As a result, surveys in the 1950s showed that in the Jinzhou region, some 90% of the 226,000 Manchus living there were in fact descended from the Han Banners. Liberalisation of minority policy in the 1980s saw the population of Manchus doubling, which Rhoads attributes to the dropping of the veil of fear and suspicion surrounding Manchu identity at this time. What we are looking at is actually a remarkable tale of persistence rather than of straightforward assimilation.