IIRC, at this time the Army only had plans to send First Army to the Pacific to participate in Coronet.
Still, the plan is structurally flawed in that it favors demobilizing the most experienced troops and individual troops and not units. So, units will lose their most experienced men who will be replaced with less experienced men or green trainees.
The effect on the army was exactly what you said. I’m guessing the Japanese leadership would realize it. The timing of this announcement was motivated entirely by domestic political concerns and not by military logic. It could not have come at a worse time.
The Japanese strategy all along was to dig in and hold on until the Americans wore out and quit. For a people who did not confront hard realities in their strategic thought, but used more wishful thinking, this had to be the best news they’d seen in a while.
Short of some game changing event, a truly “new thing” in the world, the Japanese aren’t going to quit now that they believe they’ve stared down the Americans and the Americans have blinked.