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Can somebody in the know chime in on this? were there concerns over privacy issues? Did Google apply pressure? etc.

Personally I find any sort of SAYT distracting and annoying and also an unnecessary privacy leak, and I wish there's a way to turn off the awesome bar altogether and just have a damn textbox for copypasting urls into.

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With the search box separated the Awesome Bar appears to just do a local search, so it is no longer a privacy leak and you can just paste URLs into it. Having done this separation:

You can tell the Search box to not do SAYT (whereupon AFAIK it doesn't talk to the search engine until you push go)

You can tell the main URL bar to not do SAYT over URLs from your history, bookmarks etcetera as you prefer.

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