No, it was supposed to be a full heal but they realized it was too much and also that its inverse, Harm reducing targets from any number of HP to 1-4 was too much so it became 10 points per level. But positive energy has always harmed undead, and it even says against undead, Heal works like Harm.

The problem is with 71 HP, no defenses to speak of, and offenses 6 levels behind par that's the easiest way to pop him. Though for the same reasons, it's incredibly easy to beat him normally, without using the Staff of Life.

Come to think of it, the Ghostlord isn't the only encounter a lot easier to beat than he really should be, just the most prominent one. There are plenty of other examples where enemies take a dozen or more rounds to react to attack, meaning that the party catches them long before they're ready even if they completely botch it, or enemies that don't bother casting hour/level buffs until after there's a problem...

It also isn't the only example where an encounter was broken by a quick, easy, and logical move and the move was blamed rather than the encounter. That's what happens when most encounters have weak Will saves and a decent PC caster encounters them. That is what Moment of Perfect Mind and Conviction potions and so forth are for. Though again, the Ghostlord is the most obvious example as he isn't "supposed" to be beaten.