Technically 5 biomes are axed, since caves, hub cities, water and other forest variant were also biomes too

I miss the plains though and hub cities.
My take on your progression is that whilst I can see that as very much closer to a realistic way of survival, (in fact I like that it could even be made into a Backstreet Boys Reunion Tour) I could see that the early dogs and ferals could be a turn off for those just trying to learn the ropes unless they are nerfed in early days on HP and damage.
The problem with having bandits in forested areas and assuming bandits have looted everything there already, if there is no loot in green areas then there would be less player incentive to visit since your only real reward is a green patch of land with high risk and low loot, unless bandit loot tables would be buffed a lot so you could get decked out after a couple of forts destroyed. You'd be better off in the biome you came from.
I agree with you though this would be far more realistic and perhaps hardcore fans and experienced FPS players would really like this. But in order to cater to newer entries I think at the start there should be some guarantee that in first few days enemies in your starter waste biome can't spawn something in that you aren't prepped for, ie ranged bandit spawns 2 hours after you spawn in on day 1 and proceeds to maul you in 2 shots or a dog comes out of nowhere and mauls you as you try killing it with a crappy club only to die in 3 or 4 bites etc.
Maybe gamestaged biome spawns could be a way to handle this so that only after a certain level the baddies get tougher but you are more than likely to have a weapon capable of handling them if used correctly.