The lower your orbit, the quicker your orbit decays due to atmospheric drag.

That’s the problem here though, that effect is lessening. So they’re gonna stay up their longer, potentially past the limits of what they can do to avoid collisions. That’s going to create problems for lower orbits.

This would be a bit of a problem for manned space flight, but wouldn’t affect things too much otherwise.

Low earth orbit Kessler syndrome would be a problem for everything. Launching a vehicle through a shotgun of debris is going to routinely end badly.