Exactly - drone regulations should be for what's the worst case realistic crash scenario. You don't want it breaking a windshield or sending a kid to the hospital, so you can come up with some reasonable impact force / deceleration regulations. And it doesn't even mean that a safety chute is fundamentally required; most people mistakenly believe that helicopters that lose power plummet to the ground, but actually, the rotors autorotate (they're rotary wings, after all), and can (depending on the hardware) even potentially have a safe controlled landing on autorotation. You could also require minimum noise and lighting, at least while the craft is below a certain altitude, and require that they be either passive or on an independent power system.
There's one safety problem, though, that you have to be sure to address... free spinning rotors can be a serious safety hazard. Just from randomly ending up on RC forums I've ran into a number of posts of people who've injured themselves, sometimes rather seriously, on their RC craft's blades. Cowlings could help somewhat, but I don't know if that'd be enough (they're also extra weight and rob some energy). Still, I think it should be totally possible to engineer passively safe, yet still useful, drones.