I'd be incredibly interested to hear the rationale for this decision. Seems like an obviously disastrous idea.

Only thing I can think is that sign up forms make you enter a password twice to prevent you from making a typo in the password. So with this you can right click and generate a password in both password fields and it will be the same password in both

I would claim that this is much more common than the scenario described in the bug report.

LastPass, 1password and bitwarden are happily filling out both fields with the same generated password without preventing new password generation. Seems like a solved problem.

They happily try. But there are so many poorly coded websites they can't handle all possibilities. This seems like a useful feature, although I prefer the way 1password solves it.

(They handle multiple accounts on the same site, so their UI is a list rather than a single item. "Generate a random password" is just a special list item, so they can show you both.)

Also the fact that it isn't uncommon that you need to actually log in on site for browser to actually try to remember password or prompt the storage to right associated url.