It’d also be interesting to see how much further you could go with permissions restricting access. For example, my 1Password usage needs to be able to read/write DOM element values but you could potentially say no network access or ability to create script or style elements. I’m not sure how much further sandboxing could practically be taken but it really seems like the all data, all sites permission needs to be much rarer than it currently is.
The desktop app does that, not the browser extension, so it should in theory be possible to avoid allowing it to inject arbitrary code which allows connections to anywhere in the browser by limiting it to localhost.
Unfortunately, I’m not sure that a reasonable UI for something like this would be feasible without everyone just being trained to click Approve. Some kind of review process could work but that’d put it back in needing Google to admit that they need to pay humans to operate a service.
It would be an interesting exercise to try and build an open source organisation around developing and publishing extensions in the open.