Sync is bad for privacy/security since it sends your private information (bookmarks, addons, settings) over the internet and to a central server.
See also: SaaSS
The default Sync server was Firefox Sync, which no longer works, and was subsequently changed in UXP to be PM Sync. We are not authorized to use PM Sync servers. (Besides the fact those servers are not under our control, it costs them a lot of money and takes a lot of space for them to run it.)
The current UXP version of Sync (Weave) does allow self-hosting. However, we hard-disable sync in iceweasel-uxp for privacy reasons and to avoid anyone accidentally sending their data to PM Sync servers.
If you wanted to self-host and re-enable the flag, it is currently still doable - although untested and unsupported. As you mentioned I believe it needs a dialog box changed to allow overriding the default recommendation. Alternatively you could patch the default sync server in UXP. However, I haven't looked into it.
I would still caution that sending private browser configuration data over the network is not a good idea for fingerprinting and privacy reasons.