I don't doubt for a minute that the Palace/Royal Family as an institution had some concern about the rising popularity of the Sussexes in the beginning.
That may or may not have been actually felt by W&K, who are actually in line to the throne - they didn't seem to mind having H by their side all the time before he got married, and seemed to be happy to share the limelight.
So I can fully understand that Palace PR might have wanted to curtail some of the Sussexes work in order to allow for the hierarchy to shine through - there was some mention of wanting to delay some press releases etc as W&K or C&C had something to announce and they took precedence.
I imagine that was very frustrating - particularly for M - who hasn't lived as part of the Monarchy for 30+ years. Although I would guess that it was a shock for H, who had been in with W&K for so long that it probably suddenly felt like a back seat.
Unfortunately M (and maybe H, but he didn't display these tendencies prior to marriage) wants the ability to speak out and anything and everything she deems important. She was given a platform but it wasn't a wide reaching as she wanted (talking about being silenced).
The failing to turn up for the dinner with Trump made it entirely clear that she wasn't cut out for a life as a member of the Monarchy.
Yes yes I KNOW she was "on maternity leave" - but she attended other engagements around the same time, so it was obviously a choice not to attend the function with Trump.
It was a very big deal for the Royal Family and for the UK and is the entire purpose of them being the Monarchy, to play the soft diplomacy card. If it had been Obama or Biden she would have walked over hot coals to get there.
M isn't a good fit for the Royal Family as an institution. This is not a criticism, I would hate to be a part of it. That is the problem when you combine work and family.
H is free to marry anyone he wants, but in terms of marrying into the Royal Family AND then proceeding to become a working member, even the engagement interview doesn't sit quite right.
I'm not surprised there was a suggestion that M did not become a working member of the royal family. (And even less surprised in the OW interview that it was put across a bit more forcefully than was originally reported).
H doesn't want to be king, he's made that clear even prior to meeting M. However, he's not really interested in making his own way in the world, as very few people earn enough to maintain the lifestyle he gets in the royal family.
Look at Beatrice and Eugenie. They are not working royals, they have their own careers (which do not provide the lifestyle of a working royal by a long shot).
They live at Kensington Palace. So they live in a house/apartment which they couldn't afford on their own, which is protected by 24/7 security (even if it's not their own personal security) and they are funded in part by the Queen from the Duchy of Lancaster (whether via Andrew or directly).
M was miserable as a working royal - that's obvious even before you listen to the OW interview I don't blame her for that. She was also clearly homesick (again not unusual).
The problem is that by moving back to America, they caused massive issues with regards to lifestyle and security (which I don't think they thought through).
They had options open to them. M could have quit as a working royal and gone off to do whatever she wanted, H could have stayed. This would mean that H would have 24/7 security as long as they lived in the UK/a commonwealth country. Archie would have been covered by that security. Canada were happy to pay for their security whilst they were working royals. They could have lived permanently in Canada with Harry representing the Commonwealth and had security/lifestyle.
They could both have quit, and stayed in the UK. Living at Frogmore House or any of the UK royal residences would have given them security most of the time, because the royal residences are protected in their own right, even if no one is there (which is how Beatrice and Eugenie are mostly protected). They would also be covered at Frogmore by the Queen's security as they are on the Windsor Estate, and at Kensington Palace by W&K security by proximity alone.
M wanted to go home permanently. There in lies the problem. As working or non working royals in the USA the situation for security is problematic. The USA probably won't pay for it, even if H was a working royal. They have no affiliation to the Queen and Commonwealth.
They could have spent 50% of the year in the UK and 50% in the USA, and would probably have had security paid if H was working - but that doesn't work for school when Archie turns 4.
Half in and half out was never a viable option and H knew it wasn't. He's seen Edwards mess, and Sophie's. That's why they put the statement out prior to approval from the Queen, to try to force her hand. They forced it the wrong way.
It's difficult for a lot of couples from very different countries to work out a middle ground. M was only happy in the USA, I suspect H is going to find it very hard to live in California permanently. She gave up her entire life, and now he's done the same. It's not an easy position to be in.
I don't think they were really together long enough to properly thrash it out and understand what they were getting into. H has already had two long term girlfriends decide that the media interest wasn't for them.
He probably wanted her to marry him ASAP because he was in love, and he didn't want to lose her. He probably hoped that these things would work themselves out. They don't just work themselves out, they take work and a lot of compromise.
The problem comes when the compromise has to be done by someone outside of the marriage. They wanted the Queen to compromise, the British Public to compromise.
Maintaining that level of lifestyle is very very difficult. I don't even want to think about how much they spend on security, never mind the staff and the house and the rest of the lifestyle. His trust fund won't last long, and the 100 million reported from Netflix includes production costs (I think) so won't actually go that far to support their own lifestyle.
They are probably going to be rather busy with Netflix, Spotify, and Harry's two other jobs (I've forgotten what they are) so they will struggle to make money elsewhere. M is pregnant with a toddler, and about to go on maternity leave. Where are they making the additional millions they need to keep the lifestyle?
H could probably have come back as a working royal before the OW interview. M could have stayed in California with the kids, and H could travel as needed.
In 2019 Prince William carried out 220 engagements over 74 days. Surely H could manage that. He could fly back to the UK for a week, carry out 7 days of engagements (about 21 engagements) and fly back to the USA.
He could do more regular visits to Canada and the Caribbean, leaving him even closer to home. As a working royal, he would get security wherever he is in the world (as much as that presents logistical challenges). Plus all the perks of being royal.
I think the OW interview was a way of H&M venting their frustration about a situation which was bigger than they were , and one they couldn't work to their advantage - but unfortunately it came across as a personal attack (because it was) and likely ended any opportunity for H to come back as a working royal.
This leaves them in a compromised position, if more and much more lucrative deals aren't found.
It must be hard for H to defend The Crown, which showed his mother in a fairly awful light, because he's contracted to Netflix. The Crown in the latest season has really gone for the royal family, but Diana wasn't exactly made to look good.
Reconciliation might be possible over time, but that depends whether both H&M are prepared to compromise (as well as the royal family).
M has shown no interest in building bridges with her father (I'm not saying she should, just that she hasn't) and absolutely torched the royal family at a time when they knew Philip was dying. She doesn't seem eager to fix things, and so I think that will make it very difficult for H to mend things - especially if telephone discussions get leaked to Gayle King and Omid Scobie.