Felli who's that you're applauding ? ?
I made this extension primarily for development/debugging purpose on my local install, and I know it can be great to troubleshoot user accounts without asking for their password (of course it's nicer to ask the user first anyway).
If you think (or are required by law) to add this to your privacy policy, by all means add it. By default only administrators have access to the feature so you should expect they already have access to all of the data.
I don't think additional warnings or notifications make sense. If an admin wants to sneak into a user's account there are already multiple ways of doing so without the user noticing. This one is just quicker and easier to use.
