So I guess this is an example of Maria B. being overmarked.
Well, she was a 6-time Russian champion and defending World Champion at the time, so I can understand why the judges might be inclined to give Butyrskaya the benefit of the doubt over Slutskaya. By a stroke of good fortune (for Michelle) this turned out to benefit Michelle more than it did Maria.
Well my comments on the short program placings are strictly my own opinions, and as my username suggests I am a devoted Irina fan just as you are a devotee Michelle fan.

I dont recall anyone at the time commenting on the placing being wrong, or really disputing the placing, so it was probably the correct placing, just not how I would have had it. I would have had Irina first in the short on the basic of Maria's weakness in the spiral sequence and layback spin, and Irina doing a triple flip as her optional triple to Maria's triple loop.
You are right you can usual expect the defending Champion to get any benefit of doubt often, which Maria was at the time.
What did you think about 1998 Worlds? I can't find Slutskaya's LP on You Tube to refresh my memory (she fell on her Lutz in the SP), but Michelle didn't have her usual spark, IIRC. I remember thinking that Tara could have beaten Michelle's performance if she (Tara) had come.
Michelle actually skated alot faster and freely then she had in her Nagano free skate in her Worlds free skate, but also had two major mistakes, doubling a triple salchow and falling on a double axel. Irina Slutskaya and Maria Butyrskaya both turned in vastly superior free skates at Worlds, to what they had turned in at the Olympics where both had lost a 3-way split decision for the bronze medal to Lu Chen. Had Irina and Maria each not had a fall, one or both might have beaten Michelle in the free skate, since even though Michelle did have 9 first place votes the scores were extremely close.
I definitely agreed with Michelle winning though, and probably even agreed with her winning the free skate. In the short program Irina fell on the triple lutz as you said, and Maria turned her combo in a single lutz and two footed another jump. There are some who thought both were held up in the short, for Irina to be 4th, and Maria 5th, and some thought that Liashenko (6th and clean), Malinina (7th and clean) and maybe even Kwiatkwoski (8th with small step out in between triple lutz and double toe in combo) should have been higher then them. I actually ageed with the judges rankings, since I felt Slutskaya and Butyrskaya were superior enough in their programs to compensate for the major mistake compared to those others. There was definitely debate over their short prorgram placings though.
As for the free skate, Irina did two triple-triples - triple toe-triple toe and triple sal-triple loop, with a three turn out of the second jump of both but still clean. She landed 6 total triples. Her mistake was falling on a triple flip. Maria skated cleanly with 6 triples, until near the very end when she took a jarring fall doing some backwards dance steps. It was near the end, but it took her quite awhile to recover, she turned out of her last double axel, and the ending was kind of a fizzle. I think Irina and/or Maria might have beaten Michelle in the free skate without their fall. Both would have had to for one or the other to win. As it was both had higher technical marks then Michelle, but Michelle won out on the second mark. Irina beat Maria on a 5-4 split for the silver, in this case Maria won the 2nd mark slightly, Irina the tech. mark slightly. Even as an Irina fan, Irina's program lacked seriously in maturity and style, especialy compared to Michelle. Maria's fall definitely hurt her on both the tech. and pres. mark I think, since it was really a long recovery and distraction to the program.