Well the Federation has a history of signing dumb treaties. I was always under the impression from the episodes as presented that in exchange for peace, the Federation pledged not to devolop cloaking technology. I could see the Romulans insisting on this as a condition as it would give them an edge in any future encounters.
I'm honestly surprised the Dominion War and/or Shinzon incident didn't kill this off though.
I vote for this. Federation citizens and the Federation in general has adapted an appeasement policy from the get go.
The other side can break treaties as many times as they want, but there is just no response from the Federation.
Kzinti, Romulans, Tholians, Tzinkati are still around, still are enemies although being defeated by the Federation.
It probably DID if "All Good Things" is any indication. In the time it takes for Beverly to get fed up with Jean Luc's bullshit, divorce him, then get her own command of a medical ship (time enough for B4 to become an oxford scholar and Riker to take command of the Enterprise-E) cloaking devices will be standard issue on Starfleet ships.
Something else to consider: the neutral zone treaty applies to Federation starships, of course... which is to say Starfleet ships. It doesn't seem to apply to civilian ships from either side, which are doubtless subject to all kinds of invasive inspections and harsh tariffs at the neutral zone outposts. The Algeron treaty probably doesn't apply to civilians either, and certain civilian operators could probably get away with operating commercially available cloaking devices for espionage purposes. They wouldn't fool romulan or Federation sensors, of course, but they might be enough to, say, hide a holoship in a lake somewhere or fool the locals of some planet you're scamming by pretending to be the devil incarnate.
I suppose the Treaty of Algeron also contains a clear definition of a Cloaking device, and only this technology is prohibited in the Federation.
Why do you think civilian ships are allowed in. I would say evidence says otherwise, as Romulans were able to completely isolate themselves for a century and later again for about half a century.