Yes this problem is reproducible on our side. It is an UI problem indeed. A warning dialog box is shown when you change this setting and that is what brings Fiddler down.
We are definitely going to fix this but in the meantime you can set this value directly in the registry to avoid the UI problem. You have to set AllowRemote to true in ~/.mono/registry/CurrentUser/software/telerik/fiddler/values.xml
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