In reply to:
In their infinite wisdom, Google has decided that a dead-end failure page is preferably to a user-friendly redirect.
Google is right, you know. HTTP status 200 is "OK"; someone requesting a non-existent URL is not ok. Redirecting is ok, but you have to return the correct status code before you do it.
In reply to:
Do you have a custom error page? If so, the browser may interpret the result as a success (200) instead of a page not found (404).
This has nothing to do with how browsers interpret redirects, but with what the server tells the browser the status of the current request is. If an application returns status 200 for an error page, that application is broken (I'm looking at you, Gallery).
Personally, I find it confusing when I go to a specific URL and find myself at the front page unexpectedly. I much prefer a helpful error page with navigation and a search box (and some good guesses as to where I might like to be, if possible). I haven't read any studies on this, but I'm guessing most users would feel the same.