There are several threads talking about this, so this will be somewhat repetitious.
I don't find the argument that the USMLE was designed to be a test of minimum competence, and hence shouldn't be used for selection, terribly persuasive. It was in fact developed to test for minimum competence, to replace individual state exams. However the test characteristics do lend themselves to discriminating student performance. If the test really was "designed" (rather than developed) to test for minimum competence, then it should be relatively easy to get all the questions correct. You wouldn't want to ask rare or obscure facts -- instead you'd ask basic questions looking for minimum understanding. Consider the many online training modules you've probably had to complete to test your understanding of fire drills, or hand hygiene / precautions. Most modules like this have a test at the end to make sure you learned the material -- and usually you'll get 100% because it's pretty basic, and the minimum pass is 90% or so. That's a test that's been designed to test minimum competence -- it has maximal discriminatory power at that minimal knowledge level, and tells you nothing about middle or high achievers. The USMLE scoring is nothing like this.
What does S1 test? Honestly, I think it tests your ability to learn material. The actual content of the exam doesn't matter all that much. If you can learn the S1 material well and get a good score, you can probably learn the material I need you to know and get a good score.
What will the NBME do? I have no idea. But what is clear is that they feel their stakeholders are the FSMB and the AAMC, and they don't really care what anyone else thinks. They told us this, directly, at our national meeting. The FSMB really doesn't care what happens -- they only care about the P/F result in any case. The AAMC thinks this will improve the student experience and decrease stress. I doubt that -- the stress will just move to something else.
What's the likely timeline? Also unclear, but given the downstream effects I expect there would be a long lead in period to any change. The one change I could imagine might happen more quickly is quartiles -- instead of reporting scores, only reporting quartiles. This is a middle compromise -- takes away the pressure to get a 270 vs 260 vs 250. But unclear if it would really change how anyone preps for S1, and clearly hurts people who just miss a quartile cutoff (but helps people who just beat a quartile cutoff).
What's the public comment period? It's a period of time where the NBME will accept comments from the public. There's no way they would actually publish those comments publicly.
How likely are changes from the initial proposal in June? Honestly, I think it's zero. They will take public comments, then just finalize their recommendations. I doubt anything people say will be anything new that they didn't consider beforehand. And as mentioned, the only people they care about are the FSMB and the AAMC.
So what happens if they make S1 P/F? In the short term, programs will probably just demand a S2 score prior to application. This will simply put the current pressure on S1 onto S2, and as mentioned above on this thread that has all sorts of consequences -- some good, some bad. But if they make S1 P/F, it's only a matter of time until they do it to all the Steps. So, my recommendation to the IM community should the NBME propose that S1 be P/F is that we develop our own scored exam that all applicants will need to take. I expect that the major fields would follow suit -- Surgery, Peds, OB, etc. Alternatively, we could all join together and create one single exam. I would start doing this if they leave S2 as a scored exam, because it will take years to develop and it would seem that the writing is on the wall. I would announce this during the public comment period -- that's perhaps something the AAMC would listen to, since they won't want their students taking yet more exams. And most importantly, I would insist that the NBME not have anything to do with this new exam -- I don't want them profiting from this mess.