The SAR service has presumably been kept live because 500 meters inaccuracy is better than nothing when trying to find someone lost at sea ...
A more lilely reason is that Galileo SAR component is mostly independent of its GNSS function - it is a COSPAS-SARSAT receiver/transmitter (it is a common practice to piggy-badk them on other satellites these days). The native location accuracy of COSPAS-SARSAT is on the order of a few kilometers (which is already very impresseive, given that it relies solely on the analysis of the radio signal of the emergency beacon); a few hundred meters extra won't affect its usability in any way.
 the beacon is free to transmit its own coordinates if it knows them through other means (e.g. by having its own GNSS receiver, which presumably will be smart enougth to use the GPS/GLONASS/Beidou signal as well) - the responsible SAR service will receive both sets of coordinates from COSPAS-SARSAT.