I would disagree that the Magical Sword was or has ever been intended to be the Master Sword. Other than it not being stated anywhere as such, considering the amount of "behind the scenes" content we've received in recent years with books like Hyrule Historia and the like, I think we can simply look to the ending of A Link to the Past to find the answer. At the end of that game, it is stated that the Master Sword "sleeps forever" once returned to its pedestal. Being that ALttP was, even at the time, a prequel story to the events of LoZ and AoL, this is enough for me to believe that the Master Sword was meant to be a part of the ALttP story, but not the legends which would follow.
Also, the BS version of Legend of Zelda, which was essentially a "SNES" version of the original game that was released in 1995 (a few years after ALttP) had the opportunity to make this change to the Magic Sword's name but didn't. Nintendo also had the chance to change the name with the Collector's Edition release for the Gamecube, and even later with the versions released for the Virtual Console on Wii U, 3DS, and even most recently, the Switch NES Online, these later editions actually going as far as to make changes/corrections to the text in various other parts of the game.