I think it's better they take the Aus-only route rather than prejudice in favour of Commonwealth nations. I can't see a referendum changing it, the no argument has a very easy (and fairly legitimate) "Do you want a Chinese citizen as your Prime Minister!?" scare campaign.
However it's still murky. Australia's head of state is actually Queen Elizabeth the Second of Britain. It's kind of a questionable legal concept that having citizenship of Britain actually means you have Allegiance to a foreign power, since you're still a subject of Her Majesty either way. Also many politicians
didn't know they had been granted citizenship of Britain, because that only became allowed after 2002, and it's more like the e.g. British going "oh your dad was a British citizen, that makes you eligible for citizenship too!".
So in other words, lots of the people affect have never
been to the nation in question, and only got citizenship recently via a technicality (e.g. they have a
right to citizenship via parentage, but it was never sought, confirmed or voided in writing). So the high court interpretation of that as a "allegiance" is a questionable interpretation. This is troublesome because none of it is cut and dried.
Except that in this case, it wasn't an unwritten rule that wasn't being followed, it was a written rule (part of the Australian constitution even) that was apparently ignored for some time.
It was ignored because it was irrelevant. Dual citizens didn't exist before 2002 in Australia, so if you were an Australian citizen (which you had to be to run) then it was fine before. Then recently a number of people who had
zero idea that they held anything except Australian citizenship found out that they have
technical citizenship rights in another country. Before that you'd have to actively
renounce your Australian citizenship to take the theoretical citizenship rights you have somewhere else. That changed in 2002. It's like Schrodinger's citizenship: it only exists if you ask: "oh yeah right, technically, you're a citizen". e.g. you're not actually on any electoral rolls or in the UK's database on citizens at all, but when they check birth records, they find that your parents
were British, so they immediately grant you citizenship, and the law change in Australia makes that legit.
Another example was where some guy's
mother emigrated, was granted citizenship somewhere else, then by "birthright" the new nation decided the son in Australia is now technically a citizen too.
Basically the system is stupid right now, the constitution needs to be amended and the High Court is just making things worse by being
literal about things but with all-new definitions for the words.
e.g. for an example of how stupid the current system is, our government here is completely exposed to other nations silly rules for who is a citizen there. e.g. another nation could declare every single Australian as retroactive citizens and that would technically annul every election ever held. e.g. the basis of the judgement isn't rules in
Australia about who is a citizen: it's citizenship rules in
other countries that matter. And the High Court has decided that whatever other nations decide for who is a citizen overrides our own elections, even if the person in question
didn't know that those citizenship rights even existed. This is ripe for trolling or political manipulation from other nations.