The FF4A Jap 1.0 version and the US version of FF4 has a number of bugs which have been corrected in the Jap 1.1 version and the Euro version.
One of these bugs are equipment attributes, specifically weapons. For instance, the Mist Whip is supposed to have the Holy attribute, but it doesn't in the buggy version. Also, the Dragon Claw is supposed to be effective against Dragons, but obviously wasn't the case in the buggy version.
Loki's Lute apparently was supposed to be much more powerful than it was... w/o the enemy attribute annihilation power, it is a mediocre "ultimate harp". With the number of enemies that have a specific enemy attribute to take advantage of (which means 4x damage for matching enemy type with the weapon), the weapon is significantly stronger that originally thought.