There's nothing wrong with that. VSCode will certainly have a lot more development that a fork would ever see. So the best thing to do here is simply build VSCode with all proprietary stuff removed.
The plugins are the real value, and those are built behind the M$ fortress.
Clangd and rust-analyzer plugins aren't made by MS. Python has a couple separate ones, one of which the official Microsoft plugin uses. I think the only language needing a MS plugin is TypeScript, which is a MS language anyway.