IPhone – My Photos & Camera storage decreased drastically, but how

Two things to note:

1. the small print under "Optimize Mac Storage" states that "Originals will also be stored on this Mac if you have enough storage space", so hopefully the fact that you have plenty of space to spare will qualify as "enough storage space" and nothing will be deleted immediately (hopefully!)
2. even though you're not offered the option in the dialog, once you select "Optimize Storage", you can immediately switch the radio button back to "Download Originals to this Mac" Neither of these things necessarily guarantees that the originals won't be removed and re-added, but at least you will end up with all the originals on your Mac once it has had a chance to synchronize everything to its satisfaction.

I’m not sure I can address everything in your post, but here are some things that might help narrow down some options.

• If you have “optimize photos” on your iOS device/iPhone - then it is designed to upload the full, original images to iCloud. Full stop.
• Then you are expected to download those photos to all other devices from the ful version in iCloud.
• At best - you always get the perfect version and the downsampling only happens to the local / non-permanent copy that’s on a device with low storage space internally.
• At worst - you fill up the iCloud space and have to buy more to store all the originals - and you still retain the full size versions online, but at a cost.

Depending on where you split from this general idea - you may or may not have some issues that I didn’t anticipate, but I would probably reach out to Apple Support to verify your iCloud is correct and full and see options to get everything from the phone to iCloud, everything from the Mac to iCloud and then sort out the options.

Getting the local cached copy from the iPhone is very against the design so I would think you’d need specialized skills or software much more involved and time consuming than just fitting into the intended use pattern.