Imagine you get an ATH (mostly shrapnel, of course) with this option turned on.
This is my biggest issue with the idea.
You are selecting the 'option' for something in the future for which you do not know all the variables.
With the mess of a loot system that is shrapnel right now it is not uncommon at all to get hofs of shrapnel and I have gotten nearly 1k ped stacks more than once from shared loot HOFs.
I am not sure if any ATHs have dropped since the introduction of Shrapnel but it seems that with the current system it wouldn't be unlikely that a 100k ped hof would have a very large % of it as shrapnel.
Anyone will be happy in this scinario, but it does cause problems in a few ways if you had the hypethotical 'option' selected.
1. Team hunting and for some reason the team gets whiped out and you get 90% of the ath in UNTRADABLE ammo because you have it selected.
- In this instance you have maybe 90k ped worth of ammo that you need to burn off in active hunting before you can give the fair shares out to your team mates. 90k * the mythical 90% means that you will have lost 9k ped of their loot before you can even give it to them. That was your share of the loot and now you are committed to 90+hrs of hard grinding as well as not having any for yourself once it is done. Just because you opted for the 'option' to have it automatically converted.
2. You are hunting and going through a bad period and have not repaired any of your gear for a while when finally it hits, that 10k ped hof you have been needing.
Dang, not only can you not repair your gear, but you can not buy that Regen Chip from auction that you have been drooling over either. Just because you opted for the 'option' to have it automatically converted to a non tradable resource.
I am sure there are other reasons as well, but these two are enough in my mind to prefer the requirement to do it manually.
ps. I do like more options in everything, but I don't think this would be a healthy one.