Was there something wrong with how they are currently written or do they just want the badge that says they converted to Rust?

Neither. They basically see Rust as the future. They want to be able to attract young contributors and to hire young employees who are excited about Rust and who want the safety features. Bear in mind, the average age of the Linux developer is increasing. They also see technical benefits in Rust. And they are increasing test coverage of both the Rust tools and the tools written in C, IIRC.

My source is this interview with the VP of Engineering at Canonical on this topic: https://corrode.dev/podcast/s05e05-canonical/

Interestingly enough, young developers have no issues writing C or C++ when it comes to game development, Pebble, Arduino or ESP-32 coding.

Those are more expensive!

Seriously doubt it, given that there is enough FOSS on those domains as well.

Canonical hasn't contributed anything to GNU coreutils in the time since the switch was announced, just to be clear.

In reality, I think it much more about taking more control over parts of the ecosystem - the license change is part of it, but also getting rid of the old stubborn communities and maintainers.

License. GNU is copyleft and the new thing is permissive.

We might see a fracture open slowly. For me, even AGPL is not enough

Once they have a more permissive license, cui bono?

Businesses.

There is a reason all FOSS OS alternatives for embedded systems like Zephyr, NuttX, FreeRTOS, IDF, Arduino,... are not GPL based, while Google has purged Android and ChromeOS from it, with the Linux kernel being the only GPL piece left.