Google employees have said Consumer Hangouts is not going anywhere.
Google has said that some Hangouts Chat features will be available for free, others behind a paywall as you said.
They have not said if this means our current consumer Hangouts will be upgraded to Hangouts Chat, or if Hangouts Chat will be a separate app install.
You can infer either from their comments.

<chart of Allo/Hangouts>

Absolutely. However, that is their marketing strategy for product development. It doesn’t imply they will lock us out, and they have said we won’t be completely locked out. Just out of some features.

Personally, I hope they will upgrade Hangouts to Hangouts Chat, in place. I think this will happen. See, most Hangouts users are the corporate GSuite users. That’s why Hangouts has become the corporate branding, as you said. However, making a new app and making all the people who are using your product at all have to download and convert over looses the benefit of keeping the Hangouts brand. From a business perspective, it makes more sense to seamlessly upgrade all Hangouts users to Hangouts Chat users in place, without them doing anything. Then saying ‘pay for more features.’

That means we get all the benefits.

Because of GV/Project Fi, they also cannot simply discontinue consumer Hangouts.

Because it’s an objective and abject failure. Low adoption except by tech heads and their close friends. I love it and use it daily. It was being used by business and not consumer. Hence the Hangouts pivot to GSuite users as a Slack competitor. Allo is to capture the consumer market that Hangouts failed at.