Originally Posted by
Kranel_San
When I was watching the cutscene, the first thought that crossed my mind about the corpse turning to dust was due to the neo regulator already uploading the person's memories to the cloud. However, since he is still alive and to prevent his memories and existence from being deleted in others' minds then the person has to be reduced to dust before the regulators can finish. As such, what people will see with their eyes is a permanently dead person (Whom they haven't seen before) that they used to know. This new dread of seeing dead people, plus the attacks, will ultimately further people's despair into escaping death.
This is just my interpretation of what happened.