Interestingly, squats between 60–90 load the PFJ (patellofemoral joint) more than the seated knee extension. Additionally, this article makes the case that neither squats nor open chain knee extensions meet the threshold for enough force to damage the PFJ (defined as supraphysiologic stresses on patellofemoral cartilage). However, as a PT I have never taken a particular liking to the knee extension machines. But, there are some folks that don’t respond as well to certain exercises and variety can be huge for them. As the article also points out, some individuals may be apprehensive about loading squats or maintaining balance needed to complete that exercise and open chain might be really beneficial for them. The importance of quad strength in knee health cannot be overstated.
I try not to call any exercises “bad” outright. Our bodies have an amazing capacity to adapt to load, and in fact are designed to do just that. I definitely agree on the sentiment of ditching the “no pain no gain.” I think that does far more harm than good. Excellent point:)