I'm not sure how exactly they are making these calculations but I just don't see it. Both Reflect and SpaceX are targeting SSO orbits where they are only reflecting for an hour or two at sunset. That isn't true of Starlink, but that constellation is already up there and if its fine right now, I don't see it getting much worse as the materials on it get refined to be less problematic.
More regulations would just have the result of cementing a monopoly for Spacex.
All satellites in LEO only show up at close to sunset (and sunrise): When they're away from the terminator, they're either on the sun-side, and hence you can't see them for all the blue sky around them, or the night-side, in which case you can't see them because they're not lit by the sun because the Earth is in the way.
I'm still checking the maths on how bright a million satellites in a terminator-following SSO would be. I'm getting very big numbers. But then, the (vague and aspirational) suggestions I'm seeing right now for SpaceX are in the 120 kW range, which is huge, and lining up a million of those is enough for a contiguous ring just under 10 meters wide (how much under is "just under" depends both on how efficient the PV is and how high in LEO you go).
Regardless of if they're all in one orbit or spread over in multiple orbits at different shells that are all terminator-following SSO, from the ground you're getting a train of things with somewhat higher brightness than the ISS, with a fairly small apparent separation that (I tentatively think) becomes less than your eyes can resolve at at least one point in the sky (if there's say 50 shells, where those 50 get close to crossing).