I admit I have to wonder why the genetics of Lily Evans were erased since she clearly had a fair bit of power herself. I can see the influence froma the Peverell magics changing his appearance but not erasing the gifts and abilities he got from his mother (besides, I have to agree with the trope that the inbred purebloods are the ones losing their magic, not those who blend in "muggleborn" magic to maintain the genetic diversity of their blood). In any case, it appears that he's giving up the protection of his mother's blood for the protection that the Peverell blood can provide (again, I'm thinking it'd be more an augmentation rather than a replacement).