The current R2 draft has this:
A multicharacter literal shall not have an encoding prefix. Each character represented by a basic-c-char or a universal-character-name in a multicharacter literal shall be encodable as a single code unit in the narrow literal encoding.
The above does not provide a restriction on conditional-escape-sequences and numeric-escape-sequences in multicharacter literals. We presumably only want to allow ones that are valid as the sole c-char in a character-literal with no encoding prefix. Indeed, that general description may be sufficient for all forms of c-char.
Also, the title of the paper is not particularly helpful in terms of indicating what it proposes. I think something like "Support only straightforward multicharacter literals and encodable string literals" would be better.