That's a gigantic change. We can only guess that it'll work the same way that Heroic instance bosses do now-- every member of the raid will get to grab their own Badge of Honor for each and every boss kill. And that is big-- currently, the badges are only available from bosses in Heroic mode dungeons, which means the only way to get them is to run Heroics.
Of course, whether Heroics or Karazhan are harder for you depends on your experience and your raid, but my sense of the general consensus is that most guilds are already farming Karazhan, while Heroics are only being run by small groups of really experienced players just to get the badges. And when you don't need to get the badges from Heroics any more, what reason is there to go in there?
There is the Primal Nether (one drops from the last boss of every Heroic), and there is the extra Heroic loot (although as far as I know, Zul'Aman and Kara loot are usually better than dropped loot in Heroics), as well as the fun of running a challenging instance with four of your closest friends.
But the badges were what made Heroic instances really important and necessary to run, and when badges are dropping like candy in the 10 man raids, my guess is that it'll be a lot harder to find a worthwhile party for the Heroic instances. Blizzard still has a chance to balance it-- there will be, apparently, a lot more items for badges in 2.3, so the bigger supply could be matched by a bigger demand. But when you can run Karazhan with 10 people, get a bunch of epic loot, and pick up 10 badges for each person (or 12 or 13, depending on if the animal bosses, Midnight, or the Chess Event drop a badge), I'm guessing that a lot of people won't be as willing to suffer the trials of Heroic Shadow Labs or Heroic Arcatraz.