And a lot of the impacts of bugs can be more easily mitigated against with general system improvements

Yes and these improvements will converge to be a sandboxed environment. Even original unix had (weak) process isolation and ACL’s. Should we go back to cooperative multitasking because a scheduler is bloat? No, because it’s not practical. Should we remove all exploit mitigations and fix all the bugs instead? No, because it’s not practical. For reasonably complex programs we can’t tell if they are bug-free and even if we could the hardware it runs on may have bugs. The best we can do is minimize the impact a glitched program can realistically have.

Rust is the better idea then wrapping everything in a sandbox.

Rust prevents a range of stupid bugs that don’t have to happen. (plus other cool stuff) It can’t prevent logic bugs. Say e.g. you have a server with an unintentional arbitrary file inclusion. Would you rather like to wait for the bug to be fixed and be completely vulnerable in the meantime or have the impact limited to the files the server process/user is explicitely allowed to access?

In fact it had stuff like Shockwave and Flash

Sure, compared to those (whose turing completeness javascript predates btw.) it’s nice but no builtin RCE at all is still the better solution.