Halo PC had a first-person flamethrower with wonkier physics, and there would be instances of "invisible flames" depending on what settings your particles were at. As a result, people would end up walking into their little patches of fire a lot more than you'd expect.
Well, it was added by Gearbox for the MP mode. IIRC the flamethrower Bungie was making would have been a tad different looking to boot (but not sure. Perhaps the PC flamer was based of Bungie code an all that). Lag made the weapon... interesting to use...
Besides, most weapons work perfectly well against the Flood in first person, don't think that was a justification for the flamer to be 3rd person weapon.
And the damn flamethrower was so damn weak (the damage over time effect was relatively weak though it did stack, and direct damage wasn't much better than, say, dual Plasma Rifles) in Halo 3. Firing it slowed your aiming speed too.
EDIT actually, all the support weapons are rather weak for their drawbacks, in Halo 3 at least. They didn't, with the exception of the Missile Launcher, get much use in Halo 3 MP as far as i recall. Not that they have to be something you use in every match.