From what I know of flash, the 'bad bits' aren't repeatedly bad. The bad-sector-swap-out-routine in most flash drives and USB sticks will actually swap out a sector after a single read that can't be ECC-corrected, but that doesn't mean all the bits in the sector can't be written correctly ever again.

For example, in this article (IEEExplore, so paywalled for you, sorry) a generic NAND flash chip has been tested for bit-error-rates. In the 5K write cycles after an average bit has failed, it only failed to be written correctly 4 times more. That would mean that a single erase-rewrite cycle would write the complete sector without any bit errors 99% of the time: to find 'most' of the bad bits, the sector would have to be rewritten 1000s of times every time the software would want to check the fingerprint.

Not only would that take a fair amount of time, it would also introduce new failed bits. That would mean the ID of the flash chip can only be checked so many times beffore the complete sector goes bad.

It indeed is packed BCD. Some processors of that time have special instructions for that kind of notation, which makes calculating with them not much more difficult than normal binary. (Dunno if the 6502c has these kinds of opcodes, though; the Z80 for example does.) The advantage is that it makes blitting to screen really easy: instead of constantly dividing by 10, which is a processor-intensive task, you could just bitshift the number, which is much easier.