They knew that it was unbalanced and that some cards (Moxen, Ancestral Recall, etc) were too powerful, but that was on purpose because they expected scarcity to be a part of the metagame.
If you were playing with your own group of friends who owned a few cards, the small total number of overpowered cards would be a fun diversion. They didn't anticipate the huge success and scale the game achieved. With a worldwide metagame and market for buying/selling cards, scarcity vanished as top players would pay up to get 4 of whatever card gave them an edge, so revisions had to be designed in balance, rather than rely on scarcity to create balance.
Source: I read way too much MtG history a few years ago when I was working on my own card game.
If you were playing with your own group of friends who owned a few cards, the small total number of overpowered cards would be a fun diversion. They didn't anticipate the huge success and scale the game achieved. With a worldwide metagame and market for buying/selling cards, scarcity vanished as top players would pay up to get 4 of whatever card gave them an edge, so revisions had to be designed in balance, rather than rely on scarcity to create balance.
Source: I read way too much MtG history a few years ago when I was working on my own card game.