Mozilla does not need 1200 people to make Firefox. Mozilla has 1200 people because they blow all of their money irresponsibly, and that's apparently how many people you can hire with the bribes/revenue from Google it pays to maintain its monopoly. The chairwoman takes over $1M year? Why would an open source project need anyone who would be so unethical? This is like a city councilperson paying themselves $1M/year. It…
As such, they compete with all other software companies for talent. Sure, maybe working on an open source browser brings you satisfaction. But they could do so at Google, and get paid accordingly. I'm quite sure the compensation package for a Googler supervising 1200 programmers far exceeds $1 million.
As for how many people it takes to create and maintain a competitive browser, I'll take their experience over your wild guess. Remember that MS Excel Installer Team of 32 people? Yeah–big consumer software products are a beast, even if not targeting 5 operating systems.
And when Google comes around and is willing to give you $XXX million annually to set the default search engine to the one you would choose anyway, should they just turn down the money and go with bing out of spite?
Yeah, Mozilla has had its failures. It still seems terribly unfair to shit on them like this, considering all the good they have done, and are now doing again.