The general definition of a tragic flaw is a flaw in character that causes the defeat of the hero in a tragedy. In my favorite books character flaws exist for all and don't always bring about their defeat.
I've been listening to an audio version of Gail Godwin's Unfinished Desires, so I'm thinking about character development. Godwin does an amazing job of creating people that readers can admire in one sense and find distasteful in another. That is one of the reasons why her books are among my favorites.
I heard a recent interview of Ann Patchett during which she disparaged the statement that many writers, myself included, often make about our characters writing our stories. Patchett said she is always in charge and I can understand her point. When I'm writing I put myself in the heads of my characters and try to feel what they're feeling. Then I let go. That's how my characters write my story, but it is still me. I think all people have the capacity to feel what the most glorious and the most heinous people feel, because we all experience greed and hatred as well as benevolence and love. Good writers can capture both positive and negative feelings and put them on paper in the form of the actions of their characters.
I've heard many writers say that there are only a limited amount of plots. Each time I hear someone make that statement the number seems to change, but the idea is the same. Character development could have the same description, because there are only a limited amount of emotions people can feel towards each other. I suppose writers could use transactional analysis (or some other relationship theory) to figure their characters out. But this generalization about either plotting or character development limits the importance of subtle differences. The best writers pull from an infinite amount of choices for their characters and their plots.