All right! Not completely wrong!
That is interesting, what you said about Darth Marr. It might have been that Marr didn't know Malgus' intentions as a reformer; I'd imagine he hid them well. It might also have been that both Darth Marr and Darth Malgus wanted to the "the one" to change the Sith Empire, not "one of the ones," if that makes sense. There's a pretty strong only one person at the top thing with the Sith, even if they're run by a council while the Emperor's on the can (or whatever he's doing).
Not to break from lore, but I suspect is the main reason is that the writers and developers didn't want Darth Malgus on the Council for the whole False Emperor thing or other storylines. So even if it made sense, they wanted to keep him as an inside-outsider.