Were these phones ever meant for SME or originally designed for large PBX use? - NO
I don't know about the other big vendors, but between Avaya and Nortel, the SME solution was always a scaled down version of the enterprise system. So scaled down that you couldn't get to such a granular level of feature implementation. So, while the "Meridian Norstar" was a slimmed down version of Meridian, it was done in a way that went down to the ports and sets you could put on those ports.
Now, considering 200 sets for a Norstar was relatively huge at the time, and SME solutions scaled further and further up, you had options in the 200-400 seat space of having a small enterprise solution or a large SME solution. Previously, there was no/not much overlap between SME and Enterprise level. Now, you can have IP Office replacing Prologix - the smallest Definitys (Definities?). Where that's the case, there wouldn't be a strong value proposition in changing all the phones, so Avaya chose the TDM/digital environment of enterprise to take over at the IP Office level. They also made modules for Norstar phones to make IP Office a relatively modular replacement for Norstar or small Definity, and still support Merlin phones.
So, to answer your question of why not having Magix integration, its because the platforms are just too far apart, and too established to effect any major change on them. IP Office is a current middle ground.