I've not yet figured out how (or if) I'll use cloud sync in my workflow. What you've described above doesn't sound right and I agree that it could lead to conflicts etc.
My library is stored on a NAS drive and I contemplated switching the entire collection to cloud storage (I'll be more interested when support for Google Drive, OneDrive etc is availble). My hope was that the collection would be stored off my laptop (similar to how it is now on my NAS).
I had a quick look yesterday and stopped when Rekordbox stated I needed the Dropbox app installed. If I loaded my entire collection to cloud storage, that would result in the entire collection being uploaded to the cloud and then downloaded to the Dropbox folder on the laptop. Reading your comments, there would also be a copy in the Documents > Rekordbox folder.