Is it true that racquets become more flexible overtime and that some players crave these "broken-in" racquets? Or is it normal wear and tear that is actually bad news?

Never heard of the idea. Any evidence? The thought seems interesting enough to do an experiment... :)

Well, I do have an old racquet labelled ultra stiff but now feels relatively flexible after ~1.5 years of regular use. But I'm not sure whether it was already that flexible to begin with. And I certainly haven't heard offers from other players to buy my racquet because of its broken-in condition. Although I can believe racquets wearing down overtime, I find it harder to believe that people actually want them, maybe it was just my friend's theory.