It seems that you're arguing that zoning can fix some problems created by zoning in the first place.

When the real solution to this problem, as to many others, is increasing supply.

Splitting a big unit into smaller units often creates problems of egress means (for fire safety) and figuring out what to do with storage space that may not be evenly distributed throughout the house. Joining existing units rarely creates that type of problem.

And of course, nothing about that project is "exponential".