Here's a very simple, beautiful, and concise theory to explain the strange relationship between Magus and the Masamune. I posted about this years ago and it failed to gain traction, then I was reminded about it just recently when playing through CT in the original Japanese. The original Japanese has a very unexpected difference which lends strong support to the theory.
The ProblemMagus has a weakness to the Masamune which is never explained. Why is Magus weak to the Masamune?!?!?!?
BackgroundQuestion: What do these three artifacts have in common? 1. The Masamune, 2. The Mammon Machine, 3. Schala's/Marle's pendant?
Answer: They're all made of Dreamstone. In fact, it's exactly this relation that causes the Mammon Machine to be weak against the Masamune. The Mammon Machine is weak against the Masamune because they're made of the same mysterious red rock. Just like you use a diamond to cut another diamond, you use Dreamstone to cut Dreamstone.
The Simple, Beautiful, and Concise TheoryMagus is weak to the Masamune for the exact same reason that the Mammon Machine is weak to to the Masamune.
The Assumption and the ExplanationEverything else in this report is based on the words of the characters of Chrono Trigger; to explain the Theory, we need to make just a single implicit assumption which the game doesn't explicitly deal with. The assumption: Magus's "Amulet" is also made of Dreamstone. This isn't a big stretch at all: afterall, it stands to reason it would be similar to Schala's Pendant.
When Frog beats Magus in 600 AD, Magus says: "What did you do to the Masamune?!" The answer: Frog's pals got Melchoir to add a giant-ass new hunk of pure Dreamstone!
The Amulet protects Magus. As far as in-game mechanics go, it protects him from status ailments. It's much more than that, though. We witness the intimate moment when Schala gives Janus the Amulet, and she says it will keep him safe. Obviously, story-wise the Amulet is far more important than as a mere B-rate accessory.
When Magus is attacked with the Masamune, a reaction takes place similar to the Mammon-Masamune Reaction. Thus, Magus's "weakness" is not really a weakness at all, but rather a niche in his protection.
Now, the additional evidence I found in the Japanese version: I was surprised to see that the Amulet accessory has a drastically different name in the Japanese version. It was probably only changed because the original name would be way too long in English. Bearing in mind that Schala's Japanese name is Sara, the Amulet's true name:
サラのおまもり
sara no omamori
Schala's Sacred Protection
The only thing still unexplained is the Hero Medal. I see two possibilities for the Hero Medal. One is that Melchoir created it and it has survived from Zeal. It
would make for a nice "trilogy" of related neckwear: the Pendant, the Amulet, and the Medal. The other possibility is that it's native to the middle ages and its connections with the Masamune are urban legend. I tend to favor the latter, just because everything else blends so beautiful into the larger overall story, while the Medal comes way out of left field and has no connection to any of the game outside the "Tata and the Frog" chapter. It would be interesting to hear what others say about the Hero's Medal.
ONE LAST THING....
In formulating theories, it's important to give a big grain of salt to battle details. Otherwise you're forced to come to some very weird conclusions. Like: 1. Yakra is weak compared to common monsters in Magus's Castle. 2. The Ocean Palace has a whole lot of giant iron orbs above the Golem Twins room. 3. The elevators in Ocean Palace and Black Oman can descend arbitrarily long distances (if you let the battles drag on). And so on. I say this because one possible attack on my theory would be: "But the effects of Masamune in the Magus fight don't line up perfectly with the stats of the Amulet! It lowers his magic defense, not his status defense!" Well, by that logic the GreenDream is broken since it won't save Crono in the Ocean Palace. It's just an example of taking in-fight data with a grain of salt.