Since the conlang in question originated in the Himalayas or somewhere in their vicinity but its speakers ended up migrating to some (fictional) island(s) somewhere in the East China Sea, and most likely they'd have had a bunch of different small states along the way, eventually pulling a Japan and becoming completely insular while the mainland varieties went extinct, and at some point coming in contact with the Japanese and at least the coastal dialect(s) being influenced by Japanese, there could be some degree of creolisation and the language could well have been at the brink of extinction.
The way I'm picturing the transition is that the (final) loss of tone happened only after the speakers had already moved to the island(s), with literacy in their original writing system dropping to something like 1%, and the elite retreated to the highest point(s) on the island(s). The masses would strive to have a connection to their ancestors, using transcriptions made by speakers of other languages to revitalise their language, which would've been made by speakers of non-tonal languages with the exception of Chinese, but they wouldn't be literate in Chinese so they couldn't re-acquire the tonality of the words that way. The elite would have switched to writing with Chinese characters except for ceremonial purposes, in everyday use substituting the language's original (similarly largely logographic) writing system character-for-character with Chinese ones, and while at least in theory they would maintain tone, the masses would have ignored it when they became literate; so, in the modern day they'd write in Chinese characters but have few Chinese loanwords. Some kind of tone or pitch accent might linger in super-formal highly educated speech, but in everyday speech it would be long gone.
Does that sound like something that could happen? I mean, I haven't thought too much about the timeline, but the mainland varieties would probably have gone extinct by like 100BCE at the latest as the speakers assimilated into the Chinese, while the speakers in their original homeland would've already entirely assimilated into another conpeople (the Nemin) by maybe like 300BCE or earlier. Real-world implications aren't that important since both their original homeland and the island(s) are in a pocket dimension or whatever, but obviously the restriction of the Chinese influence to just the elite for centuries would still have to be explained somehow...
...but I mean, would that be a realistic justification for the loss of tone and the large numbers of homophones?
That'd be fun.