Toontown also had instanced housing.
Yup. Toontown. Granted I think the customization was pretty slim...

But regardless, coming from someone who has developed games, unless you plan for it, changing the design of something is not as simple as snapping your fingers.

What I would probably do in their shoes:
Build instanced housing and release it, but it can NOT be an FC house (because instanced FC housing would be challenging) and do what was first intended by having the current houses only serve to be as FC houses from now on, and just grandfather the individuals who currently own a house, but they cannot get their house back if they leave, they will have to take an instanced house, or they can only buy the public houses for their FC. I imagine they would want instanced housing though, ESPECIALLY if you can upgrade to a large, as a large house is extremely difficult to obtain on a lot of servers.

This would resolve the issue of instanced housing while saving time and not needing to do a TON of recoding so as to account for the FC features which would require time and effort to rework in an instanced area. If you wanted to in the future you could have instanced FC housing too and make it huge and massive with tons of gil sinks in the future, but the above would be a more solution that would solve the problems as an individual.