Talking about misinterpretations, back in the day when we startet playing the classic MB second edition, there were a lot of confusion, based on the Rulebook was printed in English, and this was long before google translate. As usual, the MB 2 ed was short of chips and short of plastic units. It come with 2 pieces of Carriers, 3 pieces of Bombers, 6 pieces of Tanks, and so on, and we actually believed it was a limit, that you were not allowed to have more than the 3 Bombers in play. Today I know better, since the Rulebook says that if you lack units, just take a piece of paper and wright down what units you want that piece of paper to represent. Not as smooth as an actual plastic sculpt, but it works.
This first misinterpretation made way for the next, namely the dice rolling. We actually believed, that if you attacked with 5 inf, 2 Tanks and 1 Bomber, you should roll all 8 dice simultaneously, and assign all the 1s to the inf, all the 3s to the Tanks, and if there was a 4 it would go to the Bomber. Of course this turned out to be wrong, according to the rulebook. But, in my opinion, this way was better than the correct way, since it favored combined arms. A mix of inf, tanks and aircrafts are stronger than a stack of inf only. Also, this wrong way of rolling dice was faster than the correct way, since you got more hits the first time, and less rounds of combat, and less dice rolling.
The worst rule distortions that comes to mind, was the Revised Battleships bombardment. You could buy like 20 Battleships, then land one infantry, and the 20 battleships would all roll preemptive against the defender. So, for the price of a 3 IPC infantry, you could clean any sea adjacent territory. Luckily, that is taken care of with the current rules
Another bad rule distortion was Trannies defending on 1. You did not need any warships. Just buy a huge stack of Trannies, and all the 1s would sink any attacking sub, Battleships or Bombers.
The use of Trannies as fodder to protect the expensive Battleship was another distortion that is now luckily changed, to a more historical correct rule. To buy Trannies to protect a Battleship, really looked like children, women and VIPs sacrifice themselves to protect the Bodyguard. If that was not a distortion, then nothing is.