mode to remove all object rotation and positioning restrictions

Do your point apply
1) to 3D objects like benches, doors, lamps and so on

OR

2) to blocks as well?

IMHO, red51 past comments explained that blocks are treated in a very different way than everything else and are the subject of a number of optimisations which speed up the rendering. So case 2) is likely to require a HUGE re-factoring of the code and potentially affect frame rate.

Case 1) is possibly lighter to implement, as those 3D objects are already independent 3D meshes like beams and planks. A uniform and common way of placing them would ease the learning curve and reduce the load on the player memory.

I would be careful to loose some of the "snapping" features, though, like lamps snapping to walls or benches following the surface they are placed upon, as in most cases these are real time savers.

So, not a server-wide setting, which would be a once-for-all-and-for-everybody choice, but a per player (console) command to turn on and off at will.