These facts remain:
1) Asbestos holds up extremely well to flame
2) Coming up with new materials is not a trivial process
3) Materials science has always progressed based on failures. Sometimes conditions can't be fully recreated in tests, and sometimes failures in the field are tragic ones.
4) There are a limited number of materials, and adding new parameters can make it difficult or impossible to work as well within the existing parameters. The O-ring material has to be formable, noncorrosive, strong, resistant to heat, and resistant to cold while maintaining solidity and yet not getting brittle (and perhaps I am missing others). Adding any one parameter (e.g., "environmental friendliness") that's not met by an existing formulation makes it harder to meet all of the above.
5) If it works, don't fix it. Abandoning an existing formula, even if there is no real increase in any of the design parameters, means there's always a chance you'll make a mistake which you might miss in the lab. Or that the fabricators will make mistakes when they make their copies of your lab prototype.
So for a number of reasons, in dealing with life or death matters (not to mention a major government program and huge amount of money), it's a mistake to let a trivial amount of asbestos or freon dictate a design change.
The only way this is not a scandal is if it appears that the new designs are no worse than the original ones.
No, we don't. We did, however, raise the lowest-acceptable temperature for launch to accommodate the shortcomings of the O-rings.
-Jay