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The problem with that is that you always need to strike a balance between being able to reconfigure as much as possible in the restoration interface and not making it overwhelming / impossible to find what is important. Changing the output directory is not one of those super important things as it can be done post-restoration without adverse effects (unlike, say, your site sending email which can indeed cause big problem with your clients if the site starts emailing people before you're 100% sure it's fully set up and tested).

Moreover, the output directory supports all of the variables you can use in backup archive naming, including [HOST]. Do you see where I am going with that?

In the simplest scenario, your production is www.example.com, whereas your development site is dev.example.com. Their root folders will be on the same folder level, right under your hosting account root. If you create a third folder, let's call it backups, on the same level you can now have the folders backups/www.example.com and backups/dev.example.com one level above each respective site's web root. This can be expressed as [ROOTPARENT]/backups/[HOST] in the Output Directory option.

So, now you have a site which automatically switches between live and dev backup output folder upon restoration, no need to do anything else.

I think this is a far neater solution than reconfiguring yet another thing during restoration.