You are of course correct. With enough blogs you could hit the timeout by looping.

There are a number of reasons why you would want to iterate over all the blogs; not just creating and deleting options or tables. In that case I would imagine that one would have to create a table capturing all the pending operations, then perform those operations in batches with a cron job. But that is hard to do inside the uninstall script of a plugin.

I guess there are no easy answers if you have a multisite with that many blogs.

My first impulse when developing for multisites is to create a network tables and use network meta instead but I know that sometimes you need more than that.