Obsidian Sync is already there, so they must have figured out some solution to conflict handling, and the other issues you mentioned (I haven’t used Obsidian Sync, so I can’t really tell)
Third party upload to google drive already does not let user see the raw content of uploaded application data (Hidden Application Data)
Though file can be uploaded as a visible synced file to a specific folder using OAuth consent.
The hidden data is better for private notes.
However, the moto of Obsidian is:
Your knowledge should last.
Obsidian uses open file formats, so you’re never locked in. You own your data for the long term.
So, visible synced files that can be downloaded by users at any time might be more preferred. (Depends on user preference really, no single morally perfect opinion can be presented)