There is still the problem that if all histories exist and if they exist equally, then the majority of them will look nothing like the real world, the shape of which depends upon some things happening more often than others. Regardless of the validity of this reasoning about "decision-making in a branch world", the characteristic experience of an agent in this sort of multiverse (where all possible histories exist equally) will be of randomness. If we think at the basic material level, agents shouldn't even exist in most branches; atoms will just disintegrate, and basic fields will do random things. If we ignore that and (inconsistently) assume enough stability to have a sequence of measurements, the measurement statistics will be wrong - if we repeat your experiment, spin up will be seen as often as spin down, because the coefficients (or the measure, if you wish) are playing no existential role.
I can see a defense for Wallace: he can claim that because "there is no number of worlds", that you're not allowed to count them like I'm doing and draw the obvious conclusion, that |down,down> will exist once and |down,up> will exist once. It seems that not only are we not allowed to ask how many worlds there are, we're not even allowed to ask questions like "what is the characteristic experience of an agent in this superposition?", because implicitly that is also branch-counting.
The whole thing is sounding decisively implausible at this point, since we end up requiring that all physical order somehow derives from "multiverse agent rationality", rather than from genuine microphysical cause and effect. The Born rule isn't only responsible for the Stern-Gerlach experiment turning out right; you need it in order for every material object to remain stable, rather than immediately turning into a random plasma that belongs to the majority class of physical configurations.
If the decision-theoretic argument works, then a rational agent should expect to find herself in a branch which respects quantum statistics, so it should not surprise her to find herself in such a branch. Perhaps there is some measure according to which "most" observers are in branches where quantum statistics aren't respected, but that measure is not one that should guide the expectations of rational agents, so I don't see why it should be surprising that we are not typical observers in the sense of typicality associated with that measure.
The subject has already been raised in this thread, but in a clumsy fashion. So here is a fresh new thread, where we can discuss, calmly and objectively, the pros and cons of the "Oxford" version of the Many Worlds interpretation of quantum mechanics.
This version of MWI is distinguished by two propositions. First, there is no definite number of "worlds" or "branches". They have a fuzzy, vague, approximate, definition-dependent existence. Second, the probability law of quantum mechanics (the Born rule) is to be obtained, not by counting the frequencies of events in the multiverse, but by an analysis of rational behavior in the multiverse. Normally, a prescription for rational behavior is obtained by maximizing expected utility, a quantity which is calculated by averaging "probability x utility" for each possible outcome of an action. In the Oxford school's "decision-theoretic" derivation of the Born rule, we somehow start with a ranking of actions that is deemed rational, then we "divide out" by the utilities, and obtain probabilities that were implicit in the original ranking.
I reject the two propositions. "Worlds" or "branches" can't be vague if they are to correspond to observed reality, because vagueness results from an object being dependent on observer definition, and the local portion of reality does not owe its existence to how we define anything; and the upside-down decision-theoretic derivation, if it ever works, must implicitly smuggle in the premises of probability theory in order to obtain its original rationality ranking.
Some references:
"Decoherence and Ontology: or, How I Learned to Stop Worrying and Love FAPP" by David Wallace. In this paper, Wallace says, for example, that the question "how many branches are there?" "does not... make sense", that the question "how many branches are there in which it is sunny?" is "a question which has no answer", "it is a non-question to ask how many [worlds]", etc.
"Quantum Probability from Decision Theory?" by Barnum et al. This is a rebuttal of the original argument (due to David Deutsch) that the Born rule can be justified by an analysis of multiverse rationality.