Transistor Current Ic vs Power Dissipation
Am I misunderstanding what the power dissipation spec means?


There are three basic ways to destroy a transistor: -


Transistor not conducting but with too much voltage applied between collector and emitter. This causes break-down of the collector-base region.
Transistor fully conducting like a closed switch but with too much current passing. Usually bonding wires fuse and go open circuit.
The middle ground where the combination of voltage and current causes the silicon to overheat, go into thermal runaway and melt the bonding wires.


None of the three are much inter-related.