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1b1ed1a
(Get the code!)
Looks like the last time this was touched in any significant fashion was in 2019. Bug 1779467 has a fair amount of additional context, including some discussion of handling of items that are currently checked out.
If my skim is correct, prior to that change Mark Item Missing would unconditionally change the item's status to missing regardless of whether it was checked. That change added some guardrails, but on the face of it I see no bar to adding further guardrails to either outright forbid marking a checked-out item missing or giving the staff user the option to instead mark it as lost (which has the implication that the patron is responsible for the loss). Or, as Lindsay suggests, just add an override permission.