Thanks for the suggestion!

Although I agree this feature would be useful in principle, I think it would cause more harm than good. For example, people may want to share a watched video with some friends only to find that the video is no longer appearing in their YouTube search results.

Another issue is that this change would be difficult to revert: someone could install the extension, head over to YouTube, and, after a few minutes, decide the extension is not for them. At that point, however, it would be too late as several watched videos could have already been flagged as "Not interested" without their explicit consent.