I read an interesting theory that Bitcoin was started by the US treasury, and that it was an experiment to help them design a new world currency. They saved the output from the first year's mining to help them control prices later down the line. It's starting to look as if Bitcoins are being removed from the market, and this is a good omen for long term price trends. It will mke it unusable as a payment method though, except for large transactions of course.
This would explain the block size of 1 MB then. By reading the original paper and Satoshi's old posts, I am still not sure why the block was not made bigger from the beginning, unless what you say is true.
There wasn't a one MB block size limit in the beginning. Bitcoin had an effective block size of 32 MB in the beginning. Satoshi changed it to one MB in the summer of 2010.