That could be an optional enhancement. And it still does not require your exact position to be sent to Google.

It requires the route you will take and the time at which you are estimated to be at certain points along it. I would say that this is even worse than your current exact position.

No, it does not require that at all. You can implement it that way, but you can also just request traffic information for a whole 'cell' without revealing your exact location, just a cell ID, then do the processing locally.