This may be a dumb question, but I'll ask anyway.

Shouldn't the AF boundary be calculated and applied to substation type transformers (tranformers with exposed bushings)?

A example would be a utility substation feeding an industrial plant. Very large transformers installed in a small fenced area, with a parking lot and/or sidewalk next to the fence.

Yes it should when interaction is taking place.
If the substation is under the control of the facility, then NFPA70E applies.
If the substation is under the control of the utility, then the NESC applies.

Unless some one or something is interacting with the exposed conductors, arc flash boundaries are not applicable to someone 'passing by on the side walk', just like they are not for people passing an indoor metal enclosed substation.

This could be rationalized to include all utility transformers however; there probably has not been a problem with these.

That is somewhat like requiring seat belts on school buses: it seems like sound reasoning yet there hasn't been a problem without.