But the context of this discussion is the difficulty of installing an APK from outside the Play Store.

This is the first time I've seen a complaint about giving permission to an app to install another app. The SmartTubeNext issue was due to the developer's keys being stolen. If you want to keep an app signed with stolen keys, you can disable Play Protect. If Play Protect uninstalled apps that Google disliked instead of apps with known vulnerabilities, people would mass disable Play Protect, which would defeat its purpose.