The issue does exist, and the purple screen does prevent one style of ad blocker. The downside though is that to prevent that type of ad blocker they show the purple screen to ALL embed users for technical reasons.
We don’t know exactly what the impact of the users of that type of ad blocker was, but as this purple screen persists when Twitch know the impact it has on legitimate users must mean that at least in Twitch’s eyes the harm caused to Twitch by that ad blocker justified to them the use of such measures that hurt the legitimate developer community and the users of our sites and services.