Are JRiver and its users here to evangelise only "pure" music, and prevent people from "doing the wrong thing" with their own music tracks? Are we here to change the minds of those with a cognitive dissonance regarding such lossy to lossless conversions?
I think not, even if the argument is appealing.
The bottom line is, if people want to do it, they will do it, just using a different tool.
I could also argue that there are indeed situations where one might want to do say an MP3 to FLAC conversion, even knowing the effect that will have. How about setting up for a funeral, there is a list of tracks to play, and the sound system or funeral company requires FLAC files. Are you going to stop and argue with them about MP3's being fine, while making arrangements for your parent's funeral, or just convert a couple of MP3s to FLAC to make them happy?
Same with a school play. There is a Playlist. Some tracks are only in AAC, but the teacher/director/whatever wants all tracks in FLAC. Okay, they should buy FLAC versions. Maybe they aren't available. Maybe they are expensive. It's a school play, the sound system isn't that good. Is anyone really going to notice the distortion introduced in the conversion, or are they going to be watching their six year old dancing around the stage?
You aren't going to educate all the funeral directors, teachers, directors, etc. on how to best handle music. In fact, you aren't going to want to once you start trying. Just look at all the discussion around MQA to see the issue.
I would suggest just a warning. Some people don't actually know it is a bad thing to do, so tell them, but still allow them to do it if they have their reasons.
For uploads to JRiver CloudPlay and so on, vet the files and reject them if they don't meet the standard. That is something that you can control and is a reasonable position to hold.
I would also really like to see a tool that can do what Nathan in suggesting, to identify tracks that have been poorly handled. That would give me the choice to re-rip them, or source better versions.