It sounds like your EC and strata manager are part of the problem rather than the solution. Their mediation has no binding legal standing as far as you are concerned as you were not part of the agreement. You can completely by-pass the EC and SM and take this on yourself (or even get a strata lawyer to do it for you).
I wouldn’t delay a moment longer in raising this with Fair Trading, even if you may have to go through the mediation process yourselves again. Look at it this way, it will make the unit a harder for your selfish upstairs neighbours to let out if prospective tenants find out that they may have to move out while carpets are laid or even if the whole floor has to be put down again.
No one has the right to enhance the value of their own property at another owner’s expense and, frankly, carpet squares are a joke and your EC and Strata Manager need their backsides kicked for agreeing to them, especially without consulting you.
Go to https://www.fairtrading.nsw.gov.au/pdfs/About_us/Forms/medform.pdf to start the process and have a serious think about talking to a strata lawyer at the very least to find out how much it would cost to run this case. It may be worth it to prevent your unit form being, as you say, unsaleable.