Re ATC assigning own separation, that happens here in Oz. IIRC, it went like this: "Report sighting the 737 on final"..."Traffic sighted"..."Follow as number two". Although critically, Our Oz AIP states:
Originally Posted by AIP Australia
(3) where an aircraft has been instructed to maintain own separation from an IFR aircraft, ATC will issue traffic information to the pilot of the IFR aircraft, including advice that responsibility for separation has been assigned to the other aircraft;
Re TCAS, my Boeing manual states
Originally Posted by Boeing
The Traffic Advisory (TA) is inhibited below 1,100 feet (+100 feet) AGL for TCAS change 6 computers and below 500 feet (+100 feet) for TCAS change 7 computers.
Change 7 came in some years ago. I wonder if the CRJ's TCAS was the same and the TA was inhibited a few seconds before the collision, which was below 500ft?
Re "normalised deviation", I'm not sure this applies here. Normalised deviation means
deviating from published (perportedly safe) procedures, with no adverse consequences, so the deviations continue. In this case, it's pretty obvious that the "published procedures" were flawed in the first place.