Zeraph

Eh, couple reasons. By failsafe they don't mean it in the more common usage, more as in, latch ditch effort to neutralize the energy, sure hope it works...
I'm also guessing they thought the failsafe would destroy the island. It was a failsafe to save the world, not protect the island, so I'm guessing they got "lucky" when it didn't destroy everything. That, plus they mention doing experiments to try and use the energy, so I'm sure they didn't want to destroy a very possible font of knowledge and power.

But ya, it's still a little silly.

PS thinking some more, maybe the failsafe was the H-bomb, and we're going to find out it should have destroyed the island when it went off but the island is sentient (Jacob?) and protected itself when it went off. Containing it.

Also, my memory is a little fuzzy, didn't something else happen when the sky turned purple? Could that have been part of the reason the island got unstuck in time (more than once) when Ben moved it? Maybe that failsafe ended up creating that loop. It sure did something similar to Desmond on a smaller scale when he relived his own life in flashes.