Post collision, all debris orbits will still be passing through the point of collision. Any deflection with a vertical component (up or down towards the earth) will have a part of their orbit go through thicker atmosphere, which will make them deorbit faster. That leaves deflections which are in the plane spanned by the two orbits ("sideways" and "forwards/backwards"). If those deflections in any way slow down the piece of debris, that will also go through lower atmosphere and deorbit.
Disregarding debris under those effects, the remaining debris will have two more things going for it: They'll be out of the LEO orbit for a large part of their (now elliptic) orbits, and they'll be smaller so they'll slow down more from friction (due to the square-cube law).
Of course, cascading effects could still affect all satellites in LEO (and humanity's access to orbit for years), but it doesn't seem to me like it'd be a "permanent" issue in LEO? What am I not seeing?
This is not too dissimilar to the process of evaporative cooling in a liquid, or gas escape from an atmosphere.
My gut feeling says that statistically, even just going from one impact to two impacts being likely would require an immense density of satellites, let alone having more collisions than that.
Then there's also the fact that every impact would have a loss of kinetic energy (because it gets converted to heat as the objects deform), which would also make a reduction in orbit likely.
If the debris keeps fragmenting, which maybe could increase odds of impact, the remaining kinetic energy would be divided over each object. The smaller the debris gets, the more drag it should feel too, because of the square-cube law[0]. So that too would only make it more likely to deorbit.
