Besides the fact that Google doesn't stop extensions from seeing everything, there's nothing wrong with allowing extensions to do that. You
should have the ability to selectively block/allow/modify content however you want before it's displayed in your browser.
The biggest issues with extensions are things like silent updates (perhaps after the developer sold their extension to a bad actor) and extensions that depend on online resources. An extension that you've verified does what it claims to and nothing else, can read/write everything, doesn't update automatically, and never sends data to random servers isn't a problem at all.