The extension does what you tell it to: If you mark all and then press remove all marked it will of course remove all. (Why is "mark all" an option: There are dozens of marking options for selecting all but one in certain groups of dupes, and "mark all" is the one where you need to do the (de-)selection manually, typically one in each group.)

If you removed too many bookmarks by mistake, it is normally not a problem: firefox keeps a copy of previous bookmarks. Just go to "Bookmarks -> Manage Bookmarks" and then under "Import and Backup -> Restore ->" there will pop up a list of automatic bookmark backups from which you can restore one.