Real sideloaders (F-Droid users, etc.) know at setup time that that's how they'll be using their phone, so it works for them. But ordinary users who are targets for sideloading malware will become a lot less attractive if attackers must convince them to wipe their phone to complete the coercive instructions.

Aliexpress has a similar approach to protect their accounts from takeovers. If you change or forget your password, all your saved payment methods are erased. This makes the account less valuable to an attacker, at the cost of a little pain to authentic account holders.