Lets take this step by step:
Adoption severs adoptees from their family
yes, legally, and yes physically as adoption happens when the brith family has failed to keep the child safe
, their heritage, their ancestry,
adopters are encouraged to 'promote the child's heritage'. Where possible adopters of similar background are sought for, but thi can't be at the expense of the child spending an excessive time in a non permanent placement
complicates legal access to birth records, medical history (harmful)
Other than the birth certificate, what birth record are there that aren't medical? My DDs have copies of their original birth certificates in their life story books. As far as I am aware, medical information from prior to adoption is still in their records, I know because I asked for some details of birth weight etc.
and open adoption, letterbox contact with birth family is at discretion of adoptive parents.
Adopters use this discretion (generally) in the best interests of the adopted child. As the legal parents that is their obligation. If they feel that contact of whatever type isn't working for their child then as their legal parents they have that right.
Legal guardianship is a better option.
Legal guardianship isn't currently an option unless there is a prior relationship with the child. So the argument is somewhat moot.
Legal guardianship does not permit a surname change making the child easier to find by abusive parents.
Legal guardianship ends at 18 whereas a parental relationship lasts a lifetime.
Legal guardianship does not give a child a fully functioning extended family.
Legal guardianship does not give a young child the permanence they need.
@UnspokenL Obviously some adoptees may wish they had been placed under a SGO instead of adoption. But under your proposal I think many current adoptees would lose out. May I ask what your personal background is so I can understand your position better?