Is it still like this? To avoid lesbian sex, do you have to avoid both LIs?
Yes both scenes are still in the game, one with Aelinia + Lydia and one Aelinia + Kaylan (in both scenes the MC is involved).
Both scenes are forced, if you are on Aelinia path or the one with Aelinia+Kaylan even if you are only on Kyalan path...
Afterwards you are asked if you want that again by Aelinia and Lydia iirc, i really hated that update.
So it seems even major harem won't be available once we decide the queen and faction? I haven't played the update and am curious of the overall quality of this new content.
Well, as you can neither choose a faction or the queen yet i can't say for sure.
But i don't think it will prevent a large harem. For queen/faction choice you are warned that your queen will obviously support her own faction and will be pissed if you are choosing in favor for the other faction and that some girls will likely be pissed at you for not choosing them as queen, but nothing about girls leaving the harem if you don't choose their faction.