Unfortunately, the current way of how things work is, like you said, "deeply flawed". You will not change it in a few months, not even in a few years too.
What you can do, however, is to adapt to current threats, the same way adversaries adapt to countermeasures. Fully secure setups do not exist, and even if one existed, it would probably become obsolete very quickly. Like James Mickens said, whatever you do, you still can be "Mossad'ed upon". Should we give up implementing security measures then?
Thinking about security in a binary fashion and gatekeeping it ("this is not enough, this is will not protect you against X and Y") is, _in my opinion_, very detrimental.
Sorry, what I'm proposing here is far from binary but yes, I am gatekeeping the bare minimum. It has to be gatekept otherwise I'm afraid we'll enter a state of mass industry delusion where everyone thinks they're safe, "doing something", even "following industry best practices", but in reality all we're doing is: [1]
If a supply chain attack would be a serious incident for you then you need to take meaningful actions to protect yourself. I'm trying to hold "you" (proponents of this idea) accountable because I don't want you to rationalize all of these actions that leave you wide open to future attacks in known, preventable ways and then pretend nobody could've seen this coming when it blows up in our face.
It's not "good enough" - it's negligence because you know that the hole is there, you know that the hackers know about it, you know how trivial it is to exploit, and yet we're arguing whether leaving this known vector open is "good enough" instead of taking the obvious next step.
Containers are very far away from "fully secure" setup, they suffer from escape vulnerabilities far more often than VMs, but their benefit is that they're lightweight and minimally obtrusive (especially for web development) and these days the integration with IDEs is so good you probably won't even notice the difference after a few days of adjusting to the new workflow.
You end up trading a bit of convenience for a lot of security - you're going to be reasonably well protected for the foreseeable future because the likelihood of someone pulling off a supply chain attack and burning a container escape 0-day on it is really low.
That should be good enough for most and if your developer machine needs more protection than this, I'll take a guess and say that your production security requirements are such that they require security review of all your dependencies before using them anyway.
With a VM you would get even more security but you would have to sacrifice a lot more convenience, so given the resistance to the less intrusive option this isn't even worth discussing right now.
What you can do, however, is to adapt to current threats, the same way adversaries adapt to countermeasures. Fully secure setups do not exist, and even if one existed, it would probably become obsolete very quickly. Like James Mickens said, whatever you do, you still can be "Mossad'ed upon". Should we give up implementing security measures then?
Thinking about security in a binary fashion and gatekeeping it ("this is not enough, this is will not protect you against X and Y") is, _in my opinion_, very detrimental.