In what way does the W3C block browsers from changing the UI of form controls? Most interesting innovation happens outside of the standard's committees, and as long as it is standardized in a reasonable amount of time, that's ok.
This is outside the scope of the W3C, and within the scope of browser vendors. The HTML specification doesn't say how a select element should be rendered, just that it should allow the user to choose from a list of options. That browsers all render select elements roughly the same is convention, not specification, and browser vendors could change if they wanted to.
Yes, vendors shouldn't do whatever they want, they should stick to the spec. In this case, the spec allows any rendering for select elements which allows the user to choose from a list of options. Using a different rendering from other browser does not violate the spec.
I've always felt like this was a major shortcoming of the specification. Inputs should have some consistent visual specification along with support for a well-defined set of styling options. We go through all of these gyrations precisely because the spec. doesn't define standard behavior. The differences in color, size, and shape from platform to platform (and browser to browser) can be very problematic for anyone trying to make the web beautiful.
The other side of the argument is that it is beneficial that browsers determine how such elements work. If they did not, millions of mobile users would be struggling with tiny but beautifully rendered UI elements.