While ego can hijack identity for it's own mad desires, an identity is required for the actuation of relational actions on a basic level. With no "center" from which to make decisions, the functions of your mind tasked with making choices will panic - this is a foundation of brainwashing/psychological manipulation. Very similar things happen to people who have a TBI, where they become stressed when forced to make choices that seem to have zero baring on "their" lives.

So dissolved identity > Panic attacks when choice-satisfaction plummets > subconscious suggests all kinds of cartoonist extremes for an easy and powerful identity > Conscious mind agrees to play along, uses this character to make decisions about > Choice-satisfaction rises.

I'm sure it's different for most others, but I had the opposite experience. It has introduced a great calm into my life.

From where I am now, I see identity as the central problem we face as a species.

Yeah, except that in practice awareness of no-self is very far from an ethical cure-it-all. There's plenty of supposedly "enlightened" folks in a variety of spiritual traditions who routinely engage in morally sub-standard behavior, despite having reached that awareness themselves and teaching it to others. We know for a fact that many spiritual traditions view correct ethics and behavior as paramount, and as the hardest part of their training.

I remember a clip I'd seen where a veteran with a TBI would break down when shopping, since there's so many choices that are focused at appealing to personality rather than utility, and his notion of his own personality was minimal.