First, keep in mind the WiFi Alliance isn't developing standards. The standards are developed in IEEE 802.11. The WiFi Alliance is basically creating a profile of the 802.11 standards that they'll cover as part of their certification program. Dragonfly is used because that's what's specified in 802.11.
Are there better ones? Perhaps, although Dragonfly has been around for a while and has been the subject of third-party analysis. There's something to be said for preferring an older scheme with well-understood implementation considerations (which you're calling "flaws") over newer proposals that might seem to have better properties, but whose implementations haven't been fully considered. In other words, prefer the devil you know.
Public key validation doesn't refer to a PKI. It just means when you're doing a Diffie-Hellman key exchange you should check that the public key you receive is in the subgroup its supposed to be in.
Honestly, I'm no expert in PAKEs, but a lot of them are built on Diffie-Hellman where this sort of check has been long known as needed depending on the group you're working in and whether its a static or ephemeral exchange. It seems disingenuous to call that a "flaw."
Some of the skepticism surrounding Dragonfly in practice seems to be more related to concerns with how the security review went down in the CFRG, and some connections to the NSA, than with the protocol itself. I understand there are other PAKEs that seem to have better security properties, like J-PAKE, but they all have other problems (JPAKE, for example, is rather slow). It's mostly a non-issue for the WiFi Alliance, as they have to work within what's supported in the IEEE specs (which basically means sticking with PSK or using Dragonfly), but I don't know why IEEE chose what they did.