Android with Play is closer and closer to being Google Android instead of an OEM fork where they control everything. Of course, Android exists without Play and the CDD/CTS pass without Play services.
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Android with Play is trending towards shipping a Google-built AOSP system image and kernel. I'm sure that's coming in the next couple of years. Mainline modules shipped via Play are already here though and include code loaded into system_server etc.
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Ok, you've convinced me that if you're worried about backdoors from US state-level attackers, you shouldn't be using Google Play services.
However, there are other reasons why this is bad, for example this one:
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I wouldn't necessarily say that someone with that threat model shouldn't be using Play services but by using an OS including Play they're using an OS with highly trusted core components built and shipped by Google via the Play Store.
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Is a "privileged" install/flash of Play Services using OpenGApps different from a stock ROM that ships Play Services (with respect to system permissions)?
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As part of installing it, they need to add all the privileged permissions and whitelisting in order for it to work properly. They make an attempt to do it. It's not meant to be any less trusted. Play services is only designed to run as a privileged app with a ton of power.
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In my opinion, the ideal solution to all of this is for governments to require that Google makes Play services available as a regular app functioning without privileged permissions. Most of all the functionality could work. Backups, etc. wouldn't and it'd have more UX friction.
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No automatic app updates, needing to prompt users to install or remove apps, needing to ask for a battery optimization exception, needing to run a foreground service, etc. Of course, every service provider has all these restrictions unless an OEM bundles their stuff in the OS.
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Neither of those things requires / involves root access when done properly. Backup services need to be built into the OS for important security reasons. However, it's entirely possible to have a generic encrypted backup service supporting any sync service via SAF, etc.
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It's unnecessary to have backup services for specific service providers. Can simply have a generic service encrypting the data and not trusting the service where it stores it. Seedvault is a major step towards that. Definitely far from perfect but it goes a long way.