Time and Resources: Generating a vanity Bitcoin address is a computationally intensive process that requires substantial computing power and time. The more complex the desired pattern, the longer it takes to generate the address. This process can be resource-consuming and may deter some users.
It practically takes seconds[1], for most personalization. I remember using my GPU to generate an address that has only lower case IIRC, and even that only took an hour or so.
Privacy Concerns: Vanity addresses, by their nature, can reveal a portion of the private key during the generation process. This could potentially expose users to security risks if the process is not handled properly. Caution must be exercised to ensure the private key is adequately protected.
It doesn't. Your vanity address can be generated locally which would expose you to just as much risk as using your wallet to generate an address. Alternatively, if you were to generate it with a third party, you can use split-key generation to keep your keys safe.
1. Does the desire for a personalized address outweigh the privacy concerns associated with generating a vanity Bitcoin address?
No. Unless you are trying to re-use your address or generating a new vanity address for each transaction, it definitely isn't worth. Besides, vanity addresses can't really be generated in a HD wallet, which negates the benefit of being able to back up using seeds.
2. Is the environmental impact of the computing power required to generate vanity addresses justified for personalization purposes?
You probably consume more energy gaming than generating vanity addresses.
[1]
https://bitcointalk.org/index.php?topic=5322102.msg56510404#msg56510404