Hello,
we know about this but those files are not ours to manage, not they can't be safely deleted or modified without compromising functionality of Steam client.

We're trying to find a safe way to remove the data redundancy, but at the moment there is no magic solution for this, all of them have some severe disadvantage (that includes also the most famous symbolic link/mklink hack).

I'm sorry I'm not sure what you mean by the first sentence. If I delete the mods from the steamapps/workshop/content/107410 folder after the mod is transferred to the Arma 3 folder everything seems to be working fine. Is there a reason why this can't be done automatically?

Don't delete those files, it will eventually corrupt the data needed by the launcher to properly detector mods. Once the issue appears you have to check the data integrity and redownload all mods. Trust me, I've been there.

Unfortunately the best result is that Steam's going to re-download the data back into those folders; the worse results includes that Steam will force you to wait until it does that and won't allow you to play, or that it gets stuck in the update loop. It the past those worst results were more probable, but Valve improved the client regarding this, but the client behavior in such situation is still undefined.

Ultimately we'll offer (the most likely) an option to link the mods directly to Steam Workshop cache, but we want to make the best effort to ensure that Steam can recover when from people meddling with those files even when they will be instructed not to do so.

Is Valve aware of the issue? Should I make a report on their support page?

No need to do that, we have contacts directly on their engineers :).
From their perspective it works as designed, although they are still improving it. Six months ago, we've dismissed the idea of symlinking as too dangerous, and now we're considering releasing it to public.