And Rey being Palpatine’s granddaughter alone does not undermine her TLJ arc, but her parents being good people does, because it means that she stopped caring about her parents all for nothing. They should’ve had it so her parents abandon her because she is a Palpatine [furthering her belief that being a Palpatine inherently makes her worthless (which Luke debunks by bringing up Leia)], which would preserve her TLJ arc.
We’ve had this conversation much earlier in this thread. The conclusion we came to is that the reason why her parents needed to be noble is so that Rey would have a reason to want to kill Palpatine. Otherwise, she should technically be thanking him for disposing of her bad parents. In other words, Palpatine needs Rey to kill him out of anger/vengeance in order for the essence transfer to be successful. Having Rey’s parents be bad people undermines this.
I definitely agree that her parents should have abandoned her because they were afraid of her power, but I’m not sure that there is an adequate way to show this to the audience while still having Palpy’s plan not be so nonsensical.