In the old system, the pair code was effectively a password. It's obvious that resetting the sync key wiped out your synced data; the synced data was encrypted with the old key and generating a new one obviously wouldn't let you decrypt it. (It's possible the old key can still be used to recover the data, but I'm not sure).
Complaining that it demanded a pair code is like complaining that gmail asks you for a 2fa code after you've turned on 2fa. Of course it does, that's how the security works.
Of course, the pair code system is kind of a pain, so they introduced passwords. But the pair code system does work if you use it correctly. I don't think it's fair to call it 'completely borked' when your problems are entirely down to user error.
Keep in mind that Firefox Sync always protects all your profile data; Mozilla can't access it because your machines encrypt it. This is unlike Chrome's profile sync where all the data lives on Google's servers and is accessible to them. As a result the authentication can't be as simple as 'sign in with your gmail account' or something like that.