I can't imagine that Firefox on iOS will actually be that useful. Half the usefulness of Firefox is the extensions which I think would violate the store rules on iOS wouldn't they?

The primary usefulness I would see is syncing your browser history, bookmarks, etc. across devices. I use Safari and I have pretty much every extension I feel like I need.

Can this be done? The last time I checked, Firefox Sync was only available on iOS via some hacky workaround with an extra (ToS-bending) app.

Yes, proper syncing with Desktop Firefox is a core part of the new Firefox for iOS initiative.

OK, but (sorry if I'm misunderstanding!) can it be done now?

Not sure I understand your question, but the thing I'm talking about is a new "Firefox for iOS" product being worked on right now, due for release pretty soon IIUC, that will include syncing among its core capabilities:

  https://github.com/mozilla/firefox-ios

I wonder if there could be some collaboration where firefox, chrome, safari, IE, opera, etc. can exchange and sync - possibly too much to deal with, and might hurt innovation.

Firefox is my primary browser everywhere but on iOS. It would be nice if I could have the passwords, history and bookmarks available to me on all my other OSes on iOS as well.

This is a huge gap for Firefox IMO.