IIRC one of Chrome's various selling points when it launched was that Flash was bundled in, so 1. you always had Flash and 2. the plugin was more likely to be properly compatible with the browser, and 3. because Chrome updated constantly, that means you got updated Flash, too. So they definitely were trying to address that glaring pain point you brought up.
Plus Chrome's multiprocess model and sandboxing meant when Flash crashed you'd lose a tab or two instead of the whole browser. Before that I used to have browser profiles (and sometimes a whole browser) just dedicated to the fragile buggy Flash plugin, which wasn't installed on my primary browser.
