Screenshots: Recording a video / screencast without a cursor is a bug
It took me a while to come to the realization that having screencasts that lack a cursor just don't make sense. While I can come up with some extreme edge cases cases, the reality of using the great new screenshooter is that most of my recordings became a source of frustration as I forgot to switch the cursor toggle and they are useless. It's easy to retake a screenshot, but re-recording a minutes worth of footage has a much higher cost.
Interacting with apps, having buttons prelight and not record the cursor that is clicking on them is confusing. Not recording a cursor for videos is not an option. It's a bug.
I suggest insensitivizing the toggle when you switch to video or hide it.