The aim would be to lower the cost of Midlands Rail Hub so that project would pay the costs.
Not sure the plan is to cut the through services, my understanding is that the current Nott - Cardiff service remains at New St with the planned extra services using the enlarged Moor Street, the New St - Leicester/Nottingham services move to Moor St and are increased I believe.
The East services joining the Water Orton line on the flat at Satley or further down towards Washwood Heath can't make much difference. HS2 will have little issue with capacity in the early years with only a handfull of London trains per hour to service, which the media will report as another HS2 fiasco. (HS2 trains could also access a newly electrified Birmingham - Derby - Sheffield - Leeds route).
If Curzon St can be used, (big if), you avoid building the new "Eastern" platforms at Moor St and the East curve with associated junctions/signaling compared to a flat junction between HS2 and the Water Orton line and lineside signaling into part of Curzon St. If you can deliver 95% of the Midlands Rail Hub East benefits for 75% of the cost then it should be looked at, if it's a no then OK continue with the current project which delivers the capacity Birmingham needs.