I wouldn't say bad decisions so much as different decisions. Given WSL would abstract out file system access anyway, why didn't they just bridge WSL's FS similarly to how they did with WSL2 anyway? Though, I'm not sure there's much advantage left at that point.
There's not much Windows can do about this, which causes tons of issues with e.g. git clone. Erick Smith is ludicrously smart, he just couldn't squeeze better FS perf out of WSL1 due to these issues.