Magic was actually already retired from the NBA. He had tested positive for HIV shortly after the 1991 Finals and as I recall there was some issue with players from other countries threatening to not play against Magic for fear of getting infected.
Bird was limited by a back injury. Strictly in terms of putting the best possible team on the floor, Larry Johnson or Dominique Wilkins would have been a better choice than Bird at that point in his career. And Isiah Thomas or Tim Hardaway probably were better options than Magic, although Jordan might not have played if Thomas was on the team. Kevin Johnson and Mark Price also would have been good options.
But they didn’t have to worry about putting the absolute best team possible on the court because it was a foregone conclusion that they were going to win gold with ease.
That team was assembled as much for the star power as it was the talent. They wanted the biggest names, even if they weren’t necessarily still the best players.