One chief at the smaller place I was at, two co-chiefs at the larger place. At the larger place occasionally someone would chief in PGY3, just depended on the people. Generally faculty & current chiefs would feel out who might be suitable, considering the 2 years to follow, so "good" people would most likely be available and doing the job. I did it as PGY4 alongside a PGY3. No regrets. We split the duties, based in part on what rotations we were on at certain times, and left me relatively free to study at the end of the year -- plus the next year's chief(s) started taking over in the spring.
Yeah, it does take some more time, but to me it was a good trade of time for experience. Some people just don't want that experience (admin, time management, scheduling, people-management, learning more about departmental/faculty issues, both protecting and beating your residents, communication, how to pick your battles, etc. etc. etc.) -- but realize it's all a part of future practice, to one extent or other. At the very least, even if you hate it and stay out of admin in the future, you learn how to help, or avoid the eye of, or simply better understand the tribulations of, the next person up the chain.