I personally tend to believe it’s more related to reason #2. Firstly, this wayspot has been there for years, so it wouldn’t have suddenly disappeared. During renovations, they removed the original paint, so someone took a photo and requested its removal. This is more likely.
Regarding safety, I’m not making excuses, but in Taiwan, a small and densely populated area, this wayspot is quite safe. After all, it’s located next to a pedestrian zone, and there are many similar wayspots throughout the whole Ximen pedestrian zone. If this one doesn’t meet the standards, many other wayspots could be removed. (In fact, by Taiwanese standards, it still meets the standards even without the pedestrian zone time.)
Another article also describes the mistaken removal (you also responded there):