Makazian had some potential to be an interesting character if he'd been developed just a little bit more. They could have given him a subplot in one more episode, then the character would have been more compelling, kind of like a precursor to Davey Scatino in S2. In part though, his fleeting role is a big part of what made his death so shocking. That was strong storytelling, but the episode as a whole wasn't played quite right. They had a deleted scene from either the pilot or episode 2, where Pussy is arrested and turns informant. So it seems like they cut that scene to set up a "mystery episode" that was used to hook the audience early in the show's run, rather than live up to repeat viewings. The same kind of thing occurred in "Isabella" with the Fight Club twist.
The ambiguity of this episode also serves to set up Tony's unconscious gut suspicion regarding Pussy throughout Season 2, but since the mystery is solved for the viewer, but not Tony, early in that season, they might as well have revealed it to us at the beginning of the show. Brief little hints pop up throughout Season 1, which add dramatic irony when you know the truth about Pussy. In retrospect, Pussy's rathood was ultimately what defined his whole character. Before that story arc was introduced, Pussy had no real defining characteristics outside of his funny name.
Taps, lights out, 2200 hours. What's missing? Give up? Television.