We built our own browser because we didn't want to depend on another company for a critical application.
We built our own browser engine because we wanted to use the technology in more things than a browser.
We built that engine small and fast because Bertrand Serlet would have shot me if I had done otherwise. :)
You have to remember that Mac OS X itself was smaller in those days. Not iOS small, but considerably smaller that it is now.
After the initial success of Mac Safari, there was a time when I was second-guessed by some for choosing KHTML and KJS as the basis for WebKit. When we decided to do the iPhone, I was suddenly a genius again. :)
That's just the way it works in the real world.