With upvotes depleting in their power so fast, I believe users will start to allocate their upvotes to only higher quality posts that deserve the upvotes ...

For me that sounds like wishful thinking. I guess that people will upvote big accounts in the hope to get some nice upvotes back in return. However the big accounts are thinking the same and will upvote other big accounts, too. In the long term smaller accounts will get less of the cake. That is quite sad as actually to flatten the reward curve was a very good decision (but unfortunately counteracted by the introduction of higher impact votes and faster reduction of voting power).

After a couple days since implementation, what do you think the effect has been/will be?

I am not really optimistic.
If interested just check the newest article in my blog - it deals with that topic.