That's was the standard way of doing things at the beginning of the web : Let browsers experiment things then standardize what's working. Every body was doing this.
The problem with Microsoft was aggressive pricing and forced default installation, it was not the technical side of the browser.
This is not true. It was only Microsoft's innovations that were tied to a specific operating system. Other browsers were cross platform. Even Microsoft's short-lived IE for Mac was not really IE.
ActiveX nearly destroyed the web, and as recently as a few years ago there were still enterprises digging themselves out of the proprietary mess they developed themselves into.
It's unreasonable to blame ActiveX for this. NPAPI was not implicitly portable in some fashion, it was still just native code being embedded in the browser, with no particular guarantee of quality and no guarantee that a Win32 NPAPI plugin had Mac and Linux ports.
The ActiveX API was also well-specified and debuggable in a way NPAPI was not, and it was possible to embed it in other runtime environments like Office documents and Visual Basic applications relatively easily, because COM was truly wonderful technology (even if using it was, at times, very painful). It's not a coincidence that Firefox made heavy use of COM for a long time (though they've rightly been removing it).
Having used COM and ActiveX extensively, despite their flaws they were vastly superior technologies compared to NPAPI and they were a pleasure to work with. The security model was bad but again none of the competitor technologies were any better. I shipped large-scale native apps that successfully embedded ActiveX controls (like the flash player) and this was reasonable specifically because of how good the APIs were.
Even after NPAPI and ActiveX made an exit, the web still was infected by swf files and unity games and what have you. Those things are all either dead now or on life support because it turns out browser vendors don't want to maintain them and they're not portable.
The problem with Microsoft was aggressive pricing and forced default installation, it was not the technical side of the browser.