IMO since we expect Plugins and Themes to be GitHub hosted, we should think about abandoning the requirements for the readme.txt file.
Not only it is a major pain to switch between .md and .txt, with different formats and markups, but. mainly, I constantly forget to update either of them, resulting in a silly PR after PR just to update the missed one.
I saw a discussion here that talked about the update process and what filer to read:
It never got a decision I think, and I would like to petition this, so we can collectively decide on what to do.
If there are no technical concerns I vote for ditching the dinosaur in favour of the more modern chicken (chickens are descendants of dinosaurs)
In other words, expect and support a readme.md, and do not expect or read a readme.txt
Perhaps I miss something, but I think it is a classic case of non-DRY approach to have both.
It will likely require some changes down the road for the Plugin Details displaying in the CP Plugins Admin list, but since we do not have our own API for that yet anyway I think it is a good moment to think about that.