The reason for that is like you expect, someone abused that, and we do not have nice things anymore. That's the same reason why apt-get doesn't allow you to remove essential packages on Debian, without modifying a configuration file.
Is that what is ailing Firefox? I mean is Firefox losing because it tries to be safest and the best for every user, while Chrome just carries on with basic safety and nothing more?
[EDIT: Clarified the question.]
Besides, this isn't "safest and best for every user", just like the quality vs speed tradeoff in your friend's story is not something he can decide entirely on his own for his customers (though there are other complications in real life)
I can murder some trees and poison the environment for all of us, to do pointless mutli-hour re-builds of Firefox for each release and point release to have it accept my add-ons, though.
I've also never seen a reason, why I can't at least place my CA into Firefox /usr/lib/firefox folder or /etc/firefox and have it be respected. Or just place local extensions there and have firefox not require signatures for them, because there's no way these can be installed accidentally from web by clicking some link.
And if someone can trick me into modifying /usr/lib, they can just trick me into replacing Firefox completly with their malwared build, so signing will not save me anyway.
As you said yourself, that's a much bigger hassle and cost. In other words, it's an effective deterrent. Writing to a user owned file is a very low bar for allowing privileged code execution in the browser.
A long time ago browsers used to be infested with all kinds of toolbars and extensions automatically installed by third party software, I for one am glad to not have to worry about that in my computer and on networks I manage or frequent.
Only preview versions and developer versions can run unsigned addons. Both coming with their own set of reasons why you shouldn't use them as your daily browser.
There's no hassle free solution. Only way to run your own code on normal branded Firefox release is to rely on third party signed extensions (eg. Violentmonkey), but that's not really hassle free either if you have 10s of userscripts and multiple browser profiles, and you have to trust some third-party to not go rogue. I got pretty terrible malware from mozilla add-on store in the past.
One ESR build, you can disable signature checks though in about:config. Not sure how this fits into the standard Mozilla orthodoxy. Remember that core tenet of the orthodoxy is that users can't be trusted to protect themselves...
So maybe Mozilla cares less about safety of users that want to use their ESR (extended support) build. There are way fewer of these users than that of main Firefox build, so their safety is maybe not that important on the grand scale of 2.5% marketshare that Firefox still holds.
Well, great. This is at least something :)
With apt, there is a bit of method to the madness: if one imagines that apt’s job is to do the thing the user requested and then deliver a correct system, then clearly essential packages can’t be removed.
But there is not a reason to prevent the user of the software from using the software in the way he wishes on his own machine.
Chromebooks at least get this one thing right. You can disable firmware signing, but only if you are comfortable taking the laptop apart to remove a magic write protection screw. That is something a scammer cannot easily convince a grandma to do.
Modifying a morass of C++ source code is not nearly the same thing as writing an extension in Javascript.
Mozilla is just fundamentally in the wrong here.