This is great news! The old MicroPython in M5Stack firmware was the last remaining obstacle holding me from removing some ugly workarounds in Thonny's MicroPython backend.
I also like the decision to use common firmware for all M5 devices and the fact that now one can use the same esptool arguments as for other ESP32 devices. This means Thonny users can use the built-in flashing dialog for M5 devices.
According to my quick initial test Thonny is happy with the new firmware. I tried the original gray M5Stack and Atom Lite. With the gray M5Stack even the "paste" communication mode, which for some reason did't work with M5 earlier firmwares, now seems to work without problems. With Atom Lite it still causes problems, which I'll investigate later.
I'm considering adding a separate "MicroPython (M5Stack)" back-end in the upcoming Thonny 4.0, but this is warranted if it came together with M5-specific MicroPython stub files (.pyi) for autocompletion and static analysis (one of the main theme of Thonny 4.0 will be improved autocompletion).
This is where you could help me. Most likely I don't find time for compiling the stubs from the scarce documentation myself, but if you created the pyi-files describing M5-specific modules, I would include them in Thonny 4.0 under "MicroPython (M5Stack)" back-end.
Keep up the good job!
(the main author of Thonny IDE)