This is how I did it in all my campaigns. And most groups i was in used method 1. I think for me it was one of the things that made the transition into 3e a bit of a culture shock
The idea though is you normally roll then pick class. So if you are going with the 7 Con on a fighter, that is still a choice (because you could have made a wizard). But to your point, you would then suffer the Con penalty. And obviously every region and even every town was different in how it approached D&D back then. In the groups I played in, because we were in high school from like 90 or 91 to 95 (can't even remember what year I graduated), I think we were very much absorbing the zeitgeist of the time (Storyteller was big, a lot of games were leaning into things like cinematic play rather than tactical, etc). I ran Ravenloft and that was a lot more about characters and mood than whether your fighter was effective (a fighter who was tortured by failure was considered a more interesting character than one who hacked his way to the lich lord). I am not saying this is the one true way. Like I said, I think both the 3E and the 2E era have their own value in that respect. I just remember the mindset around this stuff often being very different. But that isn't to say you didn't have guys trying to optimize. It was also a time when, at least in my experience, groups were often less coherent in terms of all adhering to a particular gaming philosophy. So you might have a pretty mixed group with someone who was really into making compelling personalities, someone who wanted to kick down doors and kill orcs, someone who very into solving puzzles, etc.
Again I think it is about extremes here and also about group dynamics. If you have a group who wants to focus more on role-play, less on combat, and deal more with the inner worlds of the characters, it is pretty non-problematic for someone to intentionally make a wizard who is bad at casting spells. Where it becomes a problem is when these styles are creating conflict in the group
One thing I like about 2e is it is harder to optimize than 3E. You can do just about anything with 3E, and that is great for players who are good at optimization (as a GM running 3E I got good at it and learned to appreciate it because I had to in order to make the game function). But in 2E optimization got you very little juice for the squeeze. So I feel the overall disparity between characters wasn't as noticeable anyways (sure if someone has a 6 strength and is the fighter, that is going to matter, but it isn't the catastrophe it might be in 3E where your party really needs to be a well oiled machine).
See I disagree. The sheer amount of options available to characters in the various 2e books is an optimizer's fantasy land- the issue is more whether or not those options are available to you, and, of course, many are RNG locked.
For example, one could, using the PHB, make a Fighter with an 18*xx Strength, specialize in a long sword, and dual-class into Ranger so that by level 3 you can dual wield without any penalty using a long sword and a short sword for 5/2 attacks per turn...but you need, obviously, very high ability scores to do so.
Add the Complete Fighter's Handbook, and our Fighter spends proficiency slots on Ambidexterity and Two-Weapon Style Specialization to dual wield long swords. And can take a Kit like Cavalier to get even more bonuses to hit over time with their long swords, and at this point, if you're not going to multiclass, be an Elf for another bonus to hit. Maybe the Complete Book of Elves is on the table and you also dump proficiency slots into Bladesong Fighting style for more bonuses. And maybe your DM doesn't care about the "never leaves their forests" restriction and lets you play a Sylvan Elf with 19 Strength!
Or maybe Psionics are allowed and you roll like a madman to get a couple potent Wild Talents on top of everything else?
By the time most of the Forgotten Realms books are in play, you have some of the crazy Mythos and Specialty priests options discussed upthread, where you can mix and match abilities from multiple classes to create bizarre super characters. Chaotic Good Multiclassed Paladin/Priests of Horus? Why not? Dip into Complete Planeswalker to have Aasimar characters with strange multiclass options like Ranger/Mage? Some of the Complete books allow multiclass characters to have Kits as well.
What's that, you say, dual-wielding a pair of cestuses (cesti?) on a Fighter with multiple proficiency slots devoted to punching specialization? Sure why not, but hey, good luck finding magical punch gloves, lol.
With Complete Humanoids, you want to be an Ogre with 20 Strength? Sure, go for it. Or an Alaghi Druid or a Saurial Wizard?
And then by the time we got the Option books, you have people making custom races and classes the likes of which won't be seen again until later 3.5 with Unearthed Arcana and the various alternate class abilities (or later Pathfinder, take your pick).
Now am I saying this was the norm? No, not hardly. But all the tools were theoretically there. All that was missing was the internet, and you'd have had a bustling 2e optimization community.
As it was, every time I encountered another player, I was instantly regaled with the horror story of what was allowed in their games, like Spellfire wielders, Half-Dragons (from Dragon Magazine), and refugees from Dark Sun, Council of Wyrms, and Birthright adventuring alongside normal PHB characters!
At this point, 2e started to look more like RIFTS than anything else!