I totally agree that getting such an extension deployed on Wikidata would be really, really great.
But my understanding is that this is also really, really hard. From what I remember from various chats with people at or close to WMF / WMDE, the major hurdles are:
- getting the extension to pass a strict security review (and probably other sorts of reviews as well, such as auditing dependencies I guess? not sure about the specifics). Intuitively that shouldn't be impossible to meet, but it's something that needs resourcing on their side and we'd have no control over the timeline.
- having people at WMF or WMDE be maintainers of the said extension, so that they are able to keep it running. If I remember well there is some sort of a policy or strong preference against deploying extensions for which they don't have anyone on the payroll acting as a co-maintainer.
So it's literally impossible for a short-term funded project of a few months (which is the case here) to aim to develop a MediaWiki extension from scratch and have it deployed on Wikidata at the end. Our proposal would likely get rejected directly if we were aiming for that.
But if in some years we have a mature reconciliation extension that's well adopted in the Wikibase community, and still an unreliable and feature-poor Wikidata recon endpoint, then we'd be in a much better position to ask for WMDE to look into adopting it.