I don't understand this standpoint. When the line was electrified back in the 60s the line speed was raised so the "new" stock could be used to its full potential. Considering parts of the line need pretty comprehensive rebuilding anyway to deal with the poor formation, why not do the same this time around?
On a slightly different note, I have compared the December 2015 National Rail timetable (
https://web.archive.org/web/20160106012814/http://www.networkrail.co.uk/browse documents/eNRT/Dec15/Complete timetable - Separate PDFs.zip?a=new - table 167) to the details in the NR journey planner from May, and it's clear that northbound services are expected to have to wait at Brading for the southbound train.
2015's xx18 Sunday departure from Shanklin is due to become xx17, leaving Sandown at xx23 (xx24 in 2015). So far so similar. However the Brading times are vastly different - xx32 from May when it was xx28 in 2015. The overall northbound journey time is expected to be 4 minutes longer at 28 minutes (arriving at Pier Head xx45) compared to a 24 minute schedule when passing at St John's and Sandown. The only exceptions seem to be the last 2 journeys of each day as the line is clearly down to a 1-train service, and they only take 24 minutes for the whole northbound run. However the scheduled time from Brading to Pier Head is being cut from 14 minutes to 13, and the scheduled journey time from Brading to Shanklin is also down from 10 minutes to 9, which to me implies they likely do intend to raise the line speed on those sections.
(and in case you were wondering why I chose the 2015 NRT for comparison, it's entirely because I know if you go that for back they're a little easier to get hold of online compared to more recent editions!)