More for my own reference, but castmates, potential future castmates and anyone else is welcome to read this over.
What is the penalty?
Loss of his memory about Chrodechild is the simple answer. Of course, considering that he's known her for two years and they are pretty close, it's not quite that simple and more will be outlined later.
Why was this done?
Simply put, while Asad is a cheerful character and pretty sociable and all, but he also is very dependent on Chrodechild for his overall happiness now because even if they aren't in an actual relationship, their closeness is obvious from how they relate to each other. He is happy when she is happy and upset when she is. The lack of her presence is very much felt by him because she is such a close and dear friend no matter how she feels about him. He also is a very duty bound type, and at the time period he's from, he's serving her directly. He doesn't take failure well, and failing the woman he's in love with is a huge blow and going to lead to depression and unhappiness. This was done so he didn't become unplayable. Of course, I also love screwing with characters and this is definitely going to be fun to play with. Also, it leaves a lot more room for a future Chrodechild applicant to not wish to play out a ship with her if that is their wish. I love the ship, but I don't want to force it on anyone.
So what happens if Chrodechild is apped?
I would actually love to see her in Luceti! What happens though, is dependent on her mun. If the mun wants to play the ship or develop it, he could fall for her all over again. If the mun prefers not to, I can always have his feelings end up not as strong the second time around.
Will I remove this penalty ever?
Only if Chrodechild is apped and the player of her wants it or his castmates force him to get it removed. He would not seek it out on his own most likely no matter how much he hates the idea that his memory was screwed around with.
So how does this work exactly?
That's the confusing part. He's know Chrodechild for two years, they are very close. There's a lot of memories that he lost because of this. Mostly it will be hazy and cause actual physical pain if he tries to recall something involving her. Because of this, he will be likely to replace in his mind other people he knows that could fill her role just because it is easier than trying to remember. Yes, he will be suspicious of his lack of memory, but when it causes actual pain he'd prefer to just consider something else.
So for example, he'll think Meruvis is in command of the Blade's of Night's Veil up until the ending, and then later he's in charge of Astrasia's forces and his direct commander. He will think Fredegund is the Queen of Astrasia and that she and Meruvis are very close and he was able to talk her out of being a part of the Order.
Instead of viewing Meruvis and Fredegund as competition, he'll view them as friends. He's not that close with Fredegund yet because they just met not long ago, but he does like and respect her. He'll be thinking he and Meruvis have a similar working relationship to the one he and Chrodechild had.
And as far as leaving the Magedom, it wasn't done for Chrodechild's sake in his mind. The Blades were blamed as a whole, but Chrodechild especially took the blame. Instead he'll think Meruvis was taken hostage as insurance of the Blade's continued cooperation and good behavior and Asad didn't countenance that sort of treatment of an ally and friend who was completely innocent of the events of Lazdaa Fortress.
And of course Asad was happy to help free Astrasia because he counts the Blades as being close friends and they deserve to have their homeland back. And later he decided to join them in Astrasia because of that friendship and also because they respected his skills and while he could have gone to Salsabil, it just was depressing to be that close to his destroyed home. It was better to build a new life in a new place with people he likes and respects.
And I'll add to this as anything comes up that I need to note here for my own reference.