'Server default' should be removed from the time zone options.
'UTC' will be the default option in the Moodle administration.
'Site timezone' will be the default option in the user profil.
Write a upgrade script that fix Moodle/Users timzone set to 'server default'. At the end of the upgrade script display the timezone settings, so the Moodle administrator can change it. The upgrade script should try to detect the right admin user timezone. (most of the time an admin will prefer to set a site to his/her own timezone than were the server is hosted.)