Indeed, at that was a major mistake. Multi-user systems had existed for 20 years, Windows 95 was a huge step back.Single-user systems had existed for longer. They were dominant at the time especially on small systems - many variants of DOS, Windows 3.1, OS/2 up to version 3, Apple MacOS up to version 8, Amiga, Acorn, Atari, every console, every 8-bit micro, Symbolics Genera[1], BeOS pretended to be single-user. The days of a central computer with tons of connected terminals requiring multi-user auditing, separation, and billing - were fading. Individual computers were becoming cheaper, the internet hadn't risen. Looking back with hindsight of how things turned out, and saying "huge step back" when it was not a step back at the time, it was a step forward from Win 3.1 in many ways and a step sideways in that way, seems weird.
We still have not-multi-user systems now, for embedded devices and mobiles and similar. If it wasn't for network effects, it ought to be possible to make a single-user OS which was simpler and therefore faster and cheaper, and I bet it would be good enough for much of the computing done on the planet today - the amount of personal computers where multiple people need to logon, compared to the amount where you just want random people not to be able to poke at it without permission. Although totally not worth doing these days.
[1] http://www.bitsavers.org/pdf/symbolics/software/genera_8/Ope... page 12, last paragraph.
> ... you wish.
You started this bit by saying "once you give third parties control of the stability of your system, you lose". That happens if you give root access to anyone, on any platform. That happens in Windows 95, but the registry had system/user separation since Windows 2000. So that's 5 years without, vs 20 years with.
Yes I wish it was without problems, and that it had some more standard offline edit ability, but I don't think "userland can crash the system" was a design plan for the registry, so I don't judge it as bad design because of that.