This still seems to be broken. Any suggestions for a workaround, or updates on a fix?
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Did you ever resolve this? I'm running into a very similar situation where Safari freezes when setting certain permissions if there are a lot of tabs open. I can repro consistently with these steps:
Under Settings -> Safari -> Extensions -> [Your Extension], ensure the extension is enabled and update the settings to "Ask" for every site in the list.
Disable the extension
Open Safari, and if you don't already have 500+ tabs open, open 500+ tabs. (For me, it starts to become noticeable around 70 tabs, so you might start there, but it probably depends partly on the size of the extension)
Tap the "aA" in the URL bar, then "Manage Extensions", then enable your extension
Tap "aA" again, then tap your extension, which should have a warning triangle on it at this point
When the permissions prompts appear, tap "Always Allow" on the first prompt, then tap "Always Allow on These Websites" on the second one
If Safari doesn't crash at that point, try to open a new tab and type in the URL bar. For me, the tab opens, but Safari freezes when I try to type something in
One thing that's very strange to me is that there are no performance issues at all when I select the "Always Allow on Every Website" permission instead of the "Always Allow on These Websites" permission.