I also agree it's not a pure safety issue. They spend $50k per show, based on google university. That adds up, across all the parks.
Other parks have proven you can have fireworks and spread people out. People may not like it, but you don't have to be in front of the castle to see fireworks. We watched NYE fireworks from several different locations at SeaWorld this year. They had several displays every couple hours from 6pm to 11pm, and the big one at midnight. They had kiddie NYE celebrations earlier in the day with confetti at Sesame Street. It was brilliant, and the crowds were great. It was MORE crowded when we when back on January 2. They have social distance patrols making sure you don't cluster. They have markings on the ground in the areas where you can view fireworks. It was fine. They also opened a second exit so you had crowds split up.
Fireworks and parades probably need rethinking at Disney, anyway. How frustrating is it to have kids that can't see because everyone is standing up? And if you pick your kid up, the person behind you gets ticked off? Do it like they do in Japan. Sit down! It makes it better for everyone, and you can rest. We used to camp out to save a spot, but after the umpteenth time of having late arrivers shove their way in front of you, blocking little kids' views... we don't worry about it. We choose to ride rides during shows, and just catch fireworks from behind the castle, etc. It's not the same, but it has gotten us on 7DMT several times!