I will disagree,
As you noted the language is “(i.) Is under any acknowledgement of allegiance, obedience, or adherence to a foreign power, or is a subject or a citizen or entitled to the rights or privileges of a subject or citizen of a foreign power:...”
The idea that the Commonwealth realms who share a common history from their very founding and still share the same monarch are “foreign” powers is patently absurd.
Even granting the point, as you noted, the lines between citizenship were fuzzy well into the 1980s. The High Court drew a hard line where it does not exist.
This is festering wound on a body politic imposed by a court completely lacking any awareness of common sense.
You may disagree - and I may disagree (and to some extent I do, although I think I understand the High Court's logic and reasoning and am doing my best to present it accurately), but as the Constitution itself states in Section 76 that it is the High Court that rules on interpretations of the Constitution... well, they have. And that's it. They could theoretically change their own ruling in the future, but as it is... that's all she wrote.
Even if it is regarded as some sort of festering wound, there's no way to address it without altering the constitution.
There is a movement to do that, but it requires a referendum and Australians have historically been very resistant to changing the constitution. And honestly, in this case, getting the average voter to understand that allowing dual citizens would not allow non-citizens to be in Parliament... we have compulsory voting and getting 50% of voters overall and 50% in a majority of states as well, to understand distinctions like that... I could easily see a referendum failing simply because people didn't understand what they were voting for or against.