In the end, I think this was just the marketing speech.
They're not incmpetent so they had to know what the system they built would lead to.
My belief is just that in the end they wanted to attract some of the rot from EVE Online as they can potentially throw a lot of money at a game, but FD could never state that openly.
The thing is, in the DDF, Frontier outlined a wonderful two tier CPR (crime, punishment, and reputation) system that would've resulted in a much richer and nuanced game experience, both for PvE, and for PvP. At the end of the day, however, they dialed back the effects of the first tier of the CPR system, regarding actions against NPCs, and never even attempted to implement the second tier if their CPR system, regarding player vs player activities.
So IMO, it is neither incompetence, nor evil marketing. I think it's just laziness.