This one sentence fragment sums it up better than I've ever seen it stated anywhere else.
This is, after all, what it has come down to --- everyone believes that the whole world is saved, and that all men of good will (or even if they are not of good will) are "in the Church". Extra ecclesiam nulla salus has become utterly meaningless.
Traditional Catholics are, of course, excluded from this "everyone". Aside from us, only the more extreme of biblically fundamentalist Christians think that anyone can possibly be damned to hell for all eternity.
While I can see the slippery slope this creates, I do see a pretty big gap between "God *may* save a good willed pagan *somehow* " and "Everyone *will* eventually be saved."
Or rather, two big gaps.
"May" vs "will"
And "Some" vs "everyone"
C'ple II seems pretty clear on the universalism.
I don't know how broadly you define "traditional" but I know plenty of Catholics who go to NO masses who believe in Hell and that people will go there, even the majority.
Even Vatican II clearly teaches that there are certain people that "cannot be saved" (namely, those who know Catholicism is true and do not convert) and it only teaches that an even narrower group of people *can* be saved (namely, those who by no fault of their own don't know that the Church is true.) in and of itself I think this is fine and God can sort out who that applies to, but my issue with it is that V2 then goes on to talk about how great these other religions and their adherents are, which inherently softens our teaching on Hell, and the proof is in the pudding so to speak. If V2 only said in passing "yeah, people who by no fault of their own don't know The Church might be saved through difficulty" but then went on to strongly stress that these false religions are destructive, ordinarily lead to damnation, and therefore we need to go out and evangelize the nations, I wouldn't have an issue.
As far as what caused V2... I ultimately suspect there's a variety of causes, but I think the Spirit of Vatican *I* side hasn't been talked about much here.