To an extent.
There was no rule against it back then though, had this conversation in the office as I have the pleasure of working in Manc and there's a City Fan and a Blackburn fan and the Jack Walker era got bought up. If there's a rule you need to stick to it, no such rule for Blackburn so it's not a fair yard stick (read Man U).
It is, for that reason though, I am personally an endorser of them losing their trophies. They were won in terms of Sport fairly on a field even if that was by a squad of players who wouldn't have played together had FFP been hit, the advantage is purely structural, it is therefore not comparable to the Calcipoli incident.
The biggest problem for the sport is these rulings have in the long term proven to be the death of football and it's now a circus. There's no going back now as City will have the book thrown at them and you can't reverse the rules after you've crippled a club over them so we are stuck this FFP nonsense and now all of the private legal damages cases that come with it, and these rules don't even do what they were supposed to do, stop clubs making a mess of themeselves, as we've proven.