Frank didnt kill an innocent family - he was set up to believe that he had done so.
I dont know if people hated that particular storyline. It made sense that after a succession of stories in which Franks sanity was tested and even broken, that this might create an opportunity for some villain to take advantage, and the idea that someone might want to use a killer like Frank to get rid of the Marvel Universes top-cop, Nick Fury, also made sense.
People had more of a problem with the storyline that had come before, when Frank took over running a New York crime family. Whilst an interesting premise, many fans just couldnt accept the idea of Frank ever being willing to work with a crime family.
I heard that Bullseye framed him. Was that the John Ostrander series? I read some of that, and I thought that it took place AFTER he got sent to the chamber. Yes, I thought that Jigsaw was posing as the Punisher for a while.