This could be a significant problem indeed as it makes block mining a distributed computation between 2 parties. Can this be mitigated by putting the sequencing algorithm into a contract, which the block producers need to follow? Each sequencer will participate in the auction with (sequencing code, bid) pairs. Once the winner is known, the block producers need to obey the current sequencing code.
One downside of this approach is a potential DoS attack against the block producer, by submitting the ordering code, which is artificially complex to execute.
On the plus side, this eliminates the need for communication between 2 parties to mine a block.