The only problem I see here is that market makers can still buy the stock to prop it up so they don't have to pay out on the options they sold.

Restricting retail from buying the stock is a good idea. There is no legitimate reason to buy these stocks. They are doing naive investors a favor.

People who own the stock can either hold or sell. You sell if you think the current price exceeds the value.

I can guarantee that also no institutional investors are buying the stock. They just don't really need someone to tell them that.

Brokers are attempting to limit complaints by limiting their user's losses. They have done this in self interest.