However it would not surprise me if they "fixed" it by just removing Railcard acceptance. No other non-National Rail metro operation does, and even Merseyrail doesn't on the day tickets which are the most commonly used ones. The Overground could be removed from NR ticketing entirely, as per the way Merseyrail seems to be headed.
Not going to happen. Contactless will eventually be accepted as far afield as Brighton, Oxford,
Milton Keynes, Bedford, Cambridge and Shoeburyness which is far too big an area to remove railcard acceptance. Merseyrail is a fairly self-contained network with, as far as I can see, no sections shared with other operators. London Overground shares many sections with other operators, including Euston - Watford, Liverpool Street to Cheshunt and New Cross Gate to Crystal Palace and West Croydon.
Given that contactless will in due course be expanded to cover the majority of the southeast (at least in terms of passenger journeys), and paper tickets will likely be phased out or made ruinously expensive as happened in the Zones, it would simply not be tenable to say that Railcard discounts would cease to be available across such a huge area.
The two issues are inherently intertwined.
I don't see paper tickets becoming ruinously more expensive outside the zones, and certainly not if they are in e-ticket format or non-payg types like advance.
I really can't go into much detail, but my understanding is that the long term aim is for a new physical/digital card to be used by concessionary passengers and those who can't or don't want to use bank cards. It's likely to be similar to an Oyster card (property of TfL/TOCs) but it won't hold the balance. Oyster itself is expected to go that way at some point as well. I have not yet heard any inkling that Oyster cards themselves are going to be phased out. It may have to happen at some stage, but the promise that the credit won't ever expire means there would have to be an awful lot of publicity, potentially worldwide.