It seems to me that there are two different issues being discussed in this thread, I'll reply to the important one first.
I am, and have always been, a strong supporter of the "emulate game mechanics and faithfully as possible" position. When Philip7086 famously "put his foot down", he made the right decision, and the fact that after all this time playing with the modified mechanic two camps still exist is, for me, extremely telling.
The crux of the question, as I see it, is simply the question of Smogon's mission: what game are we trying to play competitively, and are we editors or architects of it? Smogon is successful for two reasons: we provide the best and most reasonable ruleset for governing Pokemon matches, both formally and informally, we provide an easily accessible space for players to organize and play singles with competitive community recognition at stake. Honestly, almost any website interested in competitive singles could take over the organizing competition aspect of what we do--there have been rival sites to one degree or another for as long as I can remember. The distinguishing characteristic, the one that has kept Smogon on top of the competitive Pokemon market share, so to speak, is the reasonableness on the ruleset.
When I say the ruleset is reasonable, I mean that none of our decisions are arbitrary or flavor based--if something is banned, it is banned for good, explainable reasons. The main advantage of this is that the Smogon rules become *the* default setting for competitive singles, both for high-level play and casual play. Smogon has succeeded because we are the editors, the curators of the metagame, and for a noobie interested in being efficient at Pokemon, Smogon rules are much more effective at producing good singles matches than, say, Battle Spot. OMs are OMs for a reason: as we begin to move away from the source material of cartridge-based mechanics, we move away from the actual source of our credibility as the reasonable ones in our handling of that source material). Smogon is not the most popular because it has the best players, any site could eventually reach that goal. Smogon is the most popular because the lowest level players can understand Smogon's competitive reasoning to regulate even low-level and casual play.
In terms of the best possible rule for governing sleep, I think it is important to recognize here that our present implementation has artificially boosted the effectiveness of some Pokemon in the past. Using any implementation that is possible in cartridge play, something like Breloom or Amoonguss that relies very heavily on Spore for its viability is much less desirable if you can "accidentally" lose by inadvertently putting two Pokemon to sleep. Corner cases such as Choice locked sleep or having a sleep move as the only move with PP remaining are serious risk management issues using cartridge mechanics: is it worth even using Amoonguss, knowing you could in some circumstances be risking losing to Sleep Clause? Our current approach has eliminate this tension entirely, and it is worth remembering that that absence is artificial. Sleep moves don't get to be more viable than they should be simply because we are used to them.
I support the simplest possible implementation of Sleep Clause and the one most easy to implement in cartridge play: if you put a second enemy Pokemon to sleep you lose, no exceptions. Issues with Effect Spore, etc should be rare, and if it has any impact, it should be on the viability of whether players will bring sleep-inducing Pokemon to major matches. I dislike the grayed-out move idea because it creates new situations that depart from cartridge play, such as with Encore and PP stall situations.
Since hypocrisy was brought up as an issue here, I'd like to point out that our current plans are to go along with "Dexit" and to deal with an OU that is entirely subject to the whims of the Galar Pokedex, and rightly so! If we were building the most popular possible Pokemon-based game, regardless of the changes we need to make, there would be little reason to even pay attention to "Dexit", since PS! is not bound by it. Being logically consistent *is* important, and that means we need to care about how to build a ruleset that works within cartridge mechanics.
Finally, many have taken issue with the way ABR launched this topic, and while I am not a fan of unilateral leadership, I think it's important to remember that Smogon is not really a democracy and never has been--it is more of a fairly inclusive, highly meritocratic oligarchy. The advantage of Smogon's leadership has rarely been its populism, but more its desire for evidence-based decisions, logical coherence and general good sense. In my experience, far more issues have escalated from ad hominem attacks, which in my view damage the credibility of the attacker more than the target.
tl;dr: Smogon's mission calls for us to curate the metagame the cartridges have given us, not change the mechanics. The best sleep clause is the one where if you put two enemy Pokemon to sleep you lose, no exceptions.