One NAND chip is slow. NAND-based SSDs can only deliver high throughput by using many NAND chips in parallel. Additionally, the console's 16MB NAND chip is a far cry from today's 64GB chips used in mainstream SSDs.
A 7200 RPM drive can easily outperform old flash memory. It wasn't always the case that flash was the fastest storage medium. Flash performance used to be measured in KB/s, not GB/s like on modern NVMe drives.
It seems like the slight speed advantage was in uncompressing the files beforehand on the HDD essentially skipping a step that had to be performed on every boot from NAND.
Seems unlikely, file decompression tends to be quite fast (faster than even relatively fast IO if they're using lz4, but even more expensive compression methods would be faster than an HDD, to say nothing about apparently slow NAND)