I think the main reason is.once the bike is down, if the peg does not fold or break off, the bike may spin around on the peg rather than slide. Have seen a Norton do this and the rider managed to hang on (sorta) for about 2 1/2 to 3 rotations!! I was laughing so hard it took about 3 tries to get my sidestand down.
AMA in dirt track I believe requires folding pegs, pretty sure DOT does too.
I have seen quite a few Honda pegs welded up, mine are right now.. A buddy welded his up and they eventually got bent up about 15 deg from hard cornering.
I will say this when you go down hard and the motormount bolt gets bent, I am pretty sure the surface where it touches the frame is no longer flat.. on the rearset shown the frame bracket will likely twist if laid down. You could put a breakaway notch on the peg but its a bit tricky.