I'm afraid watermarking could restrict applications where LLMs can be safely used to assist with writing. If I write something myself and use an LLM to proofread it, without watermarking I can confidently say that corrections done by LLMs are small and insignificant enough to claim that the text is still authored by me, not by the model. With watermarking, however, I will never be sure if the result will not be flagged as AI generated, even if the AI contribution is very minor.