I think what Gary said on the matter (in 1998) is, like many things, a retroactive reinterpretation. The thing was a convention module meant specifically for Origins 1. As Tim Kask keeps reminding us, those conventions were, in and of themselves, huge moneymakers for TSR. It was designed specifically for the needs of a convention, including an expectation of expendable characters and a readily measurable 'score.' If only two characters exited the dungeon, with character 1 leaving with only the clothes on their backs, the other with one gem, and all other characters having died, there is a clear and obvious winner (which works great for a con game).
The module only got published when Gary/TSR realized that people really did want to buy pre-made game world and adventure content from TSR (something they supposedly did not expect). As such a product it was... well, three things:
1) It is, honestly, not a nightmare if you come to it understanding what it is and how you are expected to approach things. Everything is deadly no matter your level and you likely will not get warning, much less a saving throw to avoid (also: clearly designed for the pre-thief-as-class era). Your goal is the treasure and weighing further treasure versus further risk, you're not supposed to either defeat the evil in the dungeon or necessarily even for clearing out all the treasure (go in, get what you are comfortable getting, get out). That said, looking at the wikipedia entry of all the praise heaped on the module, I don't agree with that either. It is not one of the best modules ever made, it is simply not the nightmare routinely mentioned. I think many DMs made similar dungeons and made them as good or better than this one. It is fine.
2)The guidance at the beginning that it was a thinking player's dungeon was insufficient (and helped cement the idea to many that EGG was kinda condescending). It should have been upfront about the design intent (meant as a last-man-standing scenario with disposable characters, with a special emphasis on think-your-way-through rather than using spells and combat, and maybe even saying it was a 'gotcha' scenario and that was by design (for people who agreed up front to that premise). A bunch of 10 year olds who bought the thing (being one of the relatively few things you could buy for the game at the time, see point #3) thinking it would be a fun romp for their characters would justifiably feel like they'd been sold something under at best insufficient warning as to how things would go (kinda the lawn darts of gaming).
3) It was a terrible choice to be one of the first modules to be released (particularly without better guidance), as it cemented in a huge number of gamers' minds that this was the normal mode of intended play, as TSR saw things. Parodies of this era, like Knights of the Dinner Table, got the notion that TSR-era D&D was meant as a confrontational DM-vs-player meat grinder with dirty tricks and looking-for-loophole isms abounding and this was (one of many) part of that influence. Likewise, many a DM took this as a goal and made (often less fair, with less obvious ways out) like-minded dungeons and there were lots of hurt feelings around the lunchtable.