Firefox also has a setting like this, although I think it's even nicer in that it makes everything (current and future) AI default to opt-out, but still lets you opt in to specific use cases if you want.
Firefox took an awfully long time to get that global setting. It was clear that Mozilla Corp hoped they might be able to push AI services as a revenue generator, before the AI pushback.
Yes, indeed it does. I didn't feel this way until I worked for a YC-backed startup tho. I mean, YC is the first to admit that not everything needs to be VC funded and some things just aren't good fit for that funding model. I think a code editor is one of them.
I have not tried it, but there is "GRAM" as well. Which is a fork of Zed without any AI stuff. Not sure what's missing for you from ST but for me, I don't really see myself ever upgrading to ST4 or any future version, unless they come out with something worthwhile for ST5.