Well, she did just casually bring up eating a village of mole people so I'm not totally sure about that. And honestly I love her slightly evil side.
Character development doesn't necessarily need to mean "becoming good", it can just mean developing a trait they were lacking before. In this case, a previously impulsive villain becoming more cautious and introspective.
Which makes me wonder... since Bowser is gaining more insight, experience and connection as Bowsette, does all this thing he experiences as a female also influences him and will survive the transformation? His consciousness is still the same despite the gender change.
Does this also mean Bowser has some repressed traits that are only coming out recently?
That crown is being a sort of power limiter. "She" can't take the hits or dish it out. Bloody mouth and cracked shell. Until it came off, Bowser became unstoppable.
