I'm sorry you didn't get the role, it must be very disappointing if you were given the impression it was yours for the taking. However, it's difficult, if the interview panel are being fair and have set a criteria for assessment, then it isn't fair to give you a 'pass' because they know you in the school and if your lesson wasn't strong in areas and your interview didn't reassure them, they felt unsure that you were strong enough for the role. Bear in mind that they will have looked at overall skill mix, not just your role, too, and it may be that they just don't have enough senior teachers to provide a strong base alongside another new teacher.
As for the Chair of Governors being on the interview panel, it's good practice to have a governor on the panel and not operational at all, as long as boundaries are clear. It helps to give oversight so that fair and clear processes are maintained. However, if lesson observations are part of the interview process, Governors aren't qualified to make a judgement on the teaching they see, so should only observe 'general soft skills' such as interaction with children and other staff in the room. Also, when allocating questions, we would tend to allocate non-teaching questions such as safeguarding, contribution to wider activities of school, additional responsibilities etc. to the governor, and curriculum, teaching and learning questions to the HT/DH.
I think you're right though, if they haven't appointed, they won't get anyone now who is currently working in a school because the resignation deadline has passed. Most good teachers are in work....so where is their strong teacher going to come from? I'd imagine you'll be asked to stay on next year!