For me, the alarming fact is that this "privacywise" option was not the firs one chosen. Instead, they went with a "privacyunwise" option as a default, and only backed out because of user uproar. Bad Mozilla!
One Mozilla employee, trying to solve a specific technical problem but not necessarily having thought through all the implications of the proposed solution, suggested the "privacyunwise" option on a public mailing list that Mozilla uses for discussing decisions like this. It's a public list because that's how Mozilla prefers to operate.
In the 24 hours that follow, there are 5 responses asking for a clearer description of the problem being solved and why this specific "unwise" option is considered the best solution. Three of those responses are from Mozilla employees. Following this, the author of the original proposal says that clearly more work is needed in terms of solving the particular problem they are facing.
A few days later, there were three more mails objecting to the proposal; two from employees, one from a non-employee.
A few days after that, the original proposal author came back with what you call the "privacywise" option.
So:
1) The "privacyunwise" option was not _chosen_. It was _proposed_, on a list specifically designed to evaluate the sanity of such proposals. This list happens to be public, which is why you know that the option was considered at all before being discarded as not compatible with Mozilla's principles.
2) The "uproar" was largely, but not entirely, by Mozilla staff.
The "Bad Mozilla" conclusion can only be based on a misunderstanding of what happened here...
Disclaimer: I work for Mozilla, I saw this thread; I did not reply to it because other people got there first and I would just be repeating what they said, but had they not replied I most certainly would have.
[1] https://groups.google.com/forum/#!msg/mozilla.governance/WWK... and following thread.