The first is minor - before WoC a player could use the modmods without having to edit any XML now they can't. This will mean that some will not use the modmods because it's to hard or frightening.
I assume you are talking about the MLFs here. These are ONLY needed if you have to load the directories in a certain order, if you do not, you do not need them.
If you do need them in a subdirectory (for load order), you also need them in the parent directory however.
So whether they are needed at all depends on the mod and your directory structure. Even when they are needed, what keeps the modmodder from providing the required MLFs so the players do not need to edit them ?
The second is a bit more of a problem. If a modmod is making changes to a building the XML in the modmod's folder can be additive in certain cases. For example you can't change the bonuses a building gives only supplement them. So if you want to drop the culture provided by a building and give commerce instead you have to change the mod's buyildings XML as well as your modmod's. As you can guess with three or more independent modmodders doing stuff this can cause nightmares in merging these mods. A work around may be to put appropriate negative modifiers in your XML but I have not yet checked out this aspect.
This is no different from regular xml either, if 3 definitions for the same building exist, one wins, the other loose. With WoC they might coexist, depending on the changes you do. They can coexist as long as you do not want to remove / change entries from a 'list' (only add to them) or change single values.
Yes, there is room for improvement here to allow for removal / replacement of existing entries in lists.