Following this line of reasoning: why is 1 syntactic sugar for fromIntegral 1? If 1 has type Integer then the generic value is just a fromIntergal away!
If we can make a function more convenient to use by making it more generic, I see no reason not to do so, as long as things remain safe.
From my point of view, the automatic fromIntegral *does* cause confusion (wasn't there a question wondering about that just recently?). However, it's so common to want integer-looking literals to actually be Ints or Doubles or something that the convenience outweighs the extra complexity.
What some people seem to be saying is that using lookup with some other monad is just not common enough for it to be worth the extra complexity. I always use it with Maybe myself, and I'm all for keeping things concrete unless there's a need. I see the point about lifts though and could imagine maybe someone has some pattern where they use their own monad a lot and lifts would be a hassle... but that's just "imagine" for me :) Also, I wouldn't say more generic (or rather, less explicit lifting needed) is really totally "free"... it always looks more complicated when you see some polymorphic typeclass constrained type constructor parameter vs. a monomorphic concrete one. And I think even just *looking* simple is important!