You can compile your own browser and install it. People act as if Apple is sending the police if they install an App that doesn't meet Apple's guidelines. Limitations are about the distribution on the App Store.
> Does Tim Cook pray at nights to slow down other peoples code on iPhone?
No, but the security team tries their best to keep unsigned, dynamically generated code (such as what might come out of your browser's JIT JavaScript engine) from running.
Not really; you're basically limited to WebKit if you want acceptable performance.