Pretty much this.
Hopefully there can be some kind of compromise reached in the next few months. If not hopefully one wins & the other dies so we can continue on the currently crumbling road that leads to the moon.
The only middleground I can currently think of would be to gradually adjust max blocksize based on the avarage network load. Just like mining difficulty is readjusted every two weeks, the same could be done for max blocksize?
It's a bit more complex than that.
If there is an economic incentive for miners to agree on a bigger block size (to include more transactions with fees, for example), they will have little to no consideration for the ability of the non-mining full nodes to keep up with the load, as those are not explicitly incentivized to operate in the current setup.
Having a static hard cap on block size (reflecting network's ability to sustain itself within its current size) is the only measure that non-mining full nodes have in order to counter potential misbehaviors by the miners. If the hard limit is chosen way higher than current technological capabilities and reached prematurely it may greatly reduce the amount of nodes participating in consensus and therefore destroy the decentralization premise that Bitcoin is standing on.