How is it that the balancer could throw a game like this?

welcome to the pot.

This is particularly bad. Maybe there were parties involved? Or a bug?

I generally look for casual ladder position, now one team has 40, 439, 461, >1000, >1000 and the other team has 50, 132, 255, 190, 329, 886. So basically except one, all in the team that lost are lower ranked than 5 of the other players team!

Even if there could be some post-game change in position, doubt someone would "jump" to invalidate this.