So I'm brand new to the rebel and motorcycling as a whole, so my answer here is my own brainstorming and I could be wrong.
I sat on the bike one day thinking this over and realized the key is in a terrible spot for turning the motor off by key first which feels natural. Plus, you have to let go of the clutch to get the key which (to me) sounds like a recipe for disaster if you forget to put it into neutral when you park and suddenly your bike kicks. I'm not sure who out there leaves their bike in gear but I see this being a thing for parking on any sort of incline as you would with a car, leave it in gear so it doesn't roll off on you.
So that raises the question how to get the key without releasing the clutch. I see no other way than cutting the engine via the kill switch, clutch on, then releasing clutch (engine off) going for the key with left hand.
Overall, to me, killing via the switch just seems safer all around if there's no proof of damage to the engine which I agree I see no other way it kills it other than just cutting the electricity to the engine which is harmless.
Until proven otherwise, I'm going to continue killing it with cutoff switch first with clutch pulled even if my neutral light is on. I'll pass on the day I forget I'm in first gear and release my clutch to go for the key and discover that thing is still in gear.
2018 Rebel 500 ABS rider