2. Picard also seems to imply that it would be a very big deal if the Romulans found out about the Pegasus's cloaking device, and that it could lead to a new conflict between the Federation and the Empire.
One major problem with this possibility is that the Federation has the Klingons as allies, and the Klingons have cloaks. Obviously they're not going to lend them at will (as seen in cases like "The Defector" and "Unification"), but it does provide a rather convenient loophole which the Romulans don't have an easy answer for.
That's not to say Picard's concern was invalid, cause it wasn't. Just saying the alliance is a huge advantage when it comes to certain things.