So if mass disruption of the very system that support your life can have supporters among a community composed of smart and actively debating people, "it seemed like a good idea at the time" probably happens every week at gov agencies.
What leads to failures, and I suspect happened at Intel, was that they mistook a very localized consensus for a broader one. There's a word for this, it's called "groupthink". A group of people can talk themselves into doing something very stupid (or evil) while still thinking they're doing the right thing, given enough time and motivation.
There was no widespread consensus, outside of Intel, that the IME was a good idea. If they had solicited opinions from outside their organization, they would doubtless have gotten horrified reactions. But they didn't, or if they did they must have dismissed those concerns, because they went through with the bad idea anyway.
The apparent secrecy with which they developed the IME is also a cause for alarm; groups of people who operate in isolation are particularly prone to groupthink, and so even if their motivations are good ones, the fact that they are working without continuous feedback from anyone on the outside raises the chances of a perverse outcome.
When you think about it, "it seemed like a good idea at the time" can explain most tragedies in human histories.