I get that OAEP is recommended for new apps being CCA / Bleichenbach attack resistant. Node forcing our hand here is a bit sad, but I guess this is a “greater good” kind of thing.
I am extremely concerned about making this yet another toggle for a Discourse admin to reason about, that is a nightmare.
Instead we would need to fix Discourse Hub to support the new and old flavors concurrently, have something about our API signal the “version” of the public key.
It is a complicated change that runs through quite a few systems. The fix you proposed is a problem cause then Discourse Hub will stop working for admins that flick to that mode.