This argument makes no sense to me. Are police allowed to use discretion?

If Yes - then doing something they're already allowed to do on tape makes no difference.

If No - then either they shouldn't be doing it and tape stops them from doing something wrong. Or they should and laws can be updated to allow it.

Having things float in a legal grey area is terrible for society. If it isn't legal, make it fully legal and cops are now fully covered.