I felt much the same way about it! It smacks of the erasure of a person's identity for love, or the illusion of love. Memories are the foundation of identity

This, absolutely.

For what it's worth, the show makes it semi-explicit Olivia was aware of this; she just didn't intellectually care because she was emotionally tied up.

it was a bit cruel of Olivia to say to Nina that she'd rather forget her and be in love with Peter rather than be the person she became with Nina in her life... That somehow the "other" Olivia was better because she could... What? Fall in love a little easier?

Ridiculous. Have outlined my stunned reaction elsewhere in teh internets tonight already, but I hear you on yours.

So... Did the alt timeline with Peter's son just get erased?

I think that one's been dead and gone all along, but yes, obviously now there won't be any erasing of the Amber!verse. Which is something. Sigh.