Thank you Pickle!! Also @just-antithings I'd like to add something. I wanted to make a longer post about this but to summarize:
It's not that Arendelle should be destroyed on principle. It's not that white people should be punished in any given circumstances for the crimes of their ancestors. It's that, given the thematic implications the movie establishes, not destroying Arendelle implies some problematic meanings. Let me explain (disclaimer: this is my interpretation).
Destroying Arendelle is first presented as no more than collateral damage. "The next right thing" isn't to destroy Arendelle, but the dam. The spirits in-universe don't care about whether Arendelle stands or falls. The film doesn't intend to PUNISH Arendelle. Whether it stands or falls is irrelevant. It MAY be allowed to stand-- but when push comes to shove, protecting Arendelle cannot and should not be more important than protecting the Northuldra. You need to be alright with the possibility of sacrificing it if you ever have to.
Then Arendelle is saved, and, alright, the themes of extreme sacrifice for the sake of reparations would have been stronger if Arendelle HAD fallen and if it weren't entirely theoretical, but, okay. The message wasn't straight up contradicted.
But then, a character says the words "The spirits have decided Arendelle deserves to stand" (roughly). And, hold on. If saving Arendelle = Arendelle deserves to stand, wouldn't that mean that Arendelle being destroyed = Arendelle deserving to be destroyed? Here is when the film backtracks on its previously stablished thesis and presents a new one: that Arendelle isn't collateral damage that may or may not be harmed, but that the form of justice that Anna's character was originally trying to enact was a punishment. Now Arendelle either deserves to be punished, or it doesn't, and the movie decides that it doesn't.
But the movie didn't need to frame sacrifice for the sake of reparations as punishment. And-- alright, let's operate under the film's new logic: why does Arendelle not deserve to be punished? What changed? And if it doesn't deserve to be punished (emphasis on deserves, not in punishment), does that mean it deserves to be forgiven, instead? What has Arendelle done to actively deserve to actively stand? Not deserve to simply not be punished, but to deserve prosperity?
This problem doesn't exist in a vacuum. The movie has multiple instances of some painful two-sides-ism regarding the colonizers and the indigenous people. Iduna's character is actively rewarded for saving the son of the colonizer trying to destroy and subjugate her people. The spirits attack the indigenous people just as much as they do the colonizers when the conflict first breaks out. I don't think the writers are violently racist or that there was any malice behind this script, but they're white people with certain biased and blind spots and this results in some unfortunate implications in the writing.
Plus... Arendelle was originally goin to be destroyed. You can tell. This is just another reason behind the thematic inconsistency: the writers were going on the opposite direction and were forced to change everything at last minute. Of course the writing would be awkward and clumsy under such circumstances.