Why are bay leaves used whole and then removed rather than crushed up like other spices?
Dried bay is sometimes left in, for example this herb mix from Schwartz includes bay leaves (at less than 3%).

Dried they can easily be crushed and added as a powder, but you don't often want a lot of dried bay as the flavour can be quite overpowering.

I only use fresh bay as I have a plant outside the kitchen door and it's evergreen. Fresh, I have been known to get them fine enough to leave them in, but it's much less effort to just use them whole, perhaps slightly folded or torn (without tearing them into pieces). To leave them in you really need to make a paste or of them, using a blender/food processor (except you generally wouldn't be using enough for them to blend well). Pieces of fresh bay leaf are rather tough and prone to getting stuck in teeth, but fresh bay has a better flavour than dried. 

Unlike many herbs, you don't have to put in any extra effort to prepare them for removal - they're tough and obvious, so no tying sprigs or little bags.