I fail to see anything that Element is doing "wrong" here, the issues you are describing are issues between you and your conversation partner
Also, AFAIK it wouldn't be trivial to extract all the Signal chat histories from an iPhone device - this new service makes that much, much easier (not least because they'd be remotely accessible).
The bridge itself serves a specific purpose (opening up Signal to the Matrix API, allowing for the use of a single app), and succeeds at that. Of course there's a trade-off, and the team (at least allegedly) appears to be working on encrypted bridges so that even if the bridge decrypts from Signal, it re-encrypts on the homeserver at rest in a way that only the user (not the bridge) can decrypt in the future.
I think the complaint here is "you advertised a service doing a thing that was already possible, people might use this." I may be mis-characterizing that, but I think it's worth stepping back and thinking a bit more on the actual threat model you face, and how the proposed product (Element One) somehow subverts that. Sure it can do so at scale, but that just means this is one incremental improvement that needs more work, not that the idea needs to be thrown out entirely.
Disclaimers and warnings are not universal solutions to questions on ethics since they are not certain to be read or understood and will have some failure %. If the residual negative effects are likely to exceed the kinds of outcomes a company's core values can tolerate, then making those states unrepresentable by abandoning product ideas is sane.