What your analysis fails to take into account is that it's easier to lead than to follow. We can argue about why this is true (after all the drag effects aren't that great), but it seems empirically true. Therefore if your PR is 12:50 in a race where you were dragged along and did no leading, you can probably only go 12:57-8 if you lead wire to wire. Which sets you up to get your doors blown off by the rest of the 12:50-55 guys you're towing along.
Another element you're missing is that while everyone likes to talk a big game about going for the win, they are also trying to limit their downside risk most of the time and preserve at least medal. Going John Ngugi on the field can win you gold but it's probably more likely to get you 10th in a field of relative equals.
Finally, as regards Farah, he's shown equal ability to win in a fast or slow race (see WCs and DLs). So it's a bit of a fallacy to say that there are guys in the field that are stronger than him, even if their PRs are the same.