Back in TT magic attacks didn't have any interaction with magic resistance. Magic resistance either added dispel dice or added a ward save against spell damage (and miscasts). Magic attacks only bypassed the ethereal rule and the some ward saves in older editions. I don't mind pretty much every ward save being ignored by magic attacks, because it is something that used to happen and it makes magic attacks more universally useful (and it makes ward saves more interesting)
(Fire damage did interact with fire resistance, so that's working as intended)
Why would magic resistance impact the damage from a physical weapon just because it's enchanted? What about dwarf's magical resilience makes them resilient against a silver bullet or a tree man crushing them under its foot? Why is Sarthorael more resilient to a Grail knight's holy weapon rather than less?
This would at least make the Fay enchantress less tanky because you'd actually be able to bypass her physical resistance.
The biggest elephant in the room are the Dwarfs who all have MR. With this changed you could either increase it to help (since it's not getting in the way of anything else), or give them a map wide magic debuff that lowers the enemies winds and recharge rate so that their opponent cant use as many spells against them. Other magic resistances could also potentially be increased too based on this change so that they actually had a decent impact on spell damage.
Also this wouldn't stop melee and ranged units from dealing magic damage (and interacting with magic resistance), it would just be listed differently on the unit card.