Camera generated JPEG files will almost certainly have noise reduction built in by the camera process. By default, Camera Raw has the noise reduction turned off. Depending on the camera and ISO you are shooting at, it would behove you to learn how to use Camera Raw's excellent noise reduction. You can either build a preset or change the Camera Raw defaults to add specific noise reduction and it can be based on the camera and the ISO...
And no, there is no "severe flaw" in Camera Raw...this is a "user issue".
BTW, there is a whole forum dedicated to Camera Raw. That would be the best place to post questions.
You're using a raw converter to increase your access to more control. Among the controls you now have at your disposal are color and luminance noise reduction.
The thing is, what you'll want to do is to develop a set of Camera Raw Defaults that start your conversions off as you would like, then save that default so it pre-sets all the controls for each new image you open. In my case, I have a fair bit of noise reduction dialed-in by default for my Canon EOS-40D images.
You may also want to turn down the default sharpening, which will bring up noise in itself. I've done that as well, as you can see.