Personally, I don't think there will be any retrospective conversion of freehold to leasehold. From the exact wording of the reports, I don't think they are thinking of that either. They seem more concerned with inhibiting the future sales of freehold to foreigners.
I don't think present freehold owners should be worried with their proprietary rights but as some have pointed out, disposing of it may be a problem as you may only sell the freehold to a local. And with grads starting pay at around RM2,000, there aren't going to be that many buyers around. I suppose you could wait another 25 years for Malaysia to develop and for inflation to bring RM 1 million within the acceptable range (provided there are no new rules implemented)
What I am not sure about is transference - ie. Ok, I cannot sell but can I will it to my son? Logically it should be fine for inheritance to take place. For one thing, my Malaysian Will bequeaths the property to my wife. My friend whose Malaysian mother died was able to inherit her place even though he was Singaporean and the place was worth only RM300,000.