Front setbacks and lot area coverage ratios have a more minor version of this same effect from fires across the street. It takes a pretty good sized fire to ignite the building across a street, but as density increases and more of a lot's area is able to covered with structures, the chances to get a pretty good sized fire going do increase.
Sure, but is the benefit worth the cost? Manhattan and denser European cities without those haven't burned down since we fireproofed building materials
Any feedback brought up in a community review is on official record. I have witnessed safety concerns being brought up in community review multiple times that caused changes to the building plan. In one situation it was a very serious concern about blocking fire truck access to an elementary school.
Buildings get built with infractions all the time. With the MFH buildings it's actually a point of law to see who gets stuck with the liability -- the person that built it or the person that bought it.