Good point. While flared out, the upper arms don't have to go much behind the plane of the body for the chest to be fully stretched, not to mention the shoulder joints aren't designed to bear heavy loads with the upper arms flared out much behind the plane of the body. If touching his/her chest with a heavily loaded bar causes pain, a few inches of less range-of-motion will not hinder chest development at all.
You are absolutely right, however being flared out is one of the easiest ways to tear a pec, too. Turning a bench press into an isolation exercise is a bad idea, this is why flat bench is not often recommended for those who have a lagging chest.