Psychic definitely occupied a weird spot in Gen 1: its overall lack of type interactions both defensively and offensively lended to a powerful type, but it was really at once both an above average mid-game type and a busted uber powerful type up there with Dragon, and in-game balance wise there were two places it was in: it was a type with some mons like Mr. Mime, Alakazam, Jynx, and more who had great Special but were given really bad physical bulk to counteract it as their "weak point" despite their unintuitive type interactions.
The big elephant in the room, however, and what truly made Psychic powerful, was one (or really two) Pokemon: Mewtwo. Mewtwo was basically designed as this god-tier powerful Pokemon that you meet at the very end of the game in the very last and most deadly dungeon of the game. RBY definitely had single player JRPG game design and dungeons were a big part of it: many optional dungeons had different flavors and the legendary birds were different "dungeon bosses" of different elements, and Mewtwo was basically the ultimate dungeon boss and de facto final boss of RBY: much, much stronger than anything else with no real weak points, while its high Special and powerful Psychic STAB and Recover made it a near unstoppable force and a challenge to catch in-game. It was basically designed so that you use it, it's unstoppable, you fight it and try to catch it, it will be a major force and challenge to try to capture it for your Pokedex.
Mew was similar although not intended to be caught and more of a socialization mystery at the time, but its whole thing in-universe is that it has everything's DNA and can thus do almost anything and has a solid 100 across stat spread, while Mewtwo is more specialized and in-universe is a scientific experiment that went berserk and destroyed the lab it was in.
I do imagine the Psychic type being the powerhouse it was in Gen 1 was at least partially intentional in that regard, mainly to highlight the power of Mewtwo and Mew as these Uber powerful forces above everyone else. Other Psychic-types being strong in PvP was collateral, that said, while they were capable of being dealt with, picking on their weak physical bulk was the way for the most part, not "hitting them super effectively", which is something I think they wanted to change in Gen 2 hence why Dark was created: to block Psychic *and* hit it super effectively.
In hindsight this makes me realize Tyranitar's type combination was likely deliberately made so it could be the powerhouse that could best all other legendaries/pseudo-legendaries: a 600 BST tank that can wall Mewtwo and hit it with Crunch, resists Dragonite's Hyper Beam and also hits it with Rock STAB, deals with both Lugia and Ho-oh and the original legendary birds.
Eh it didn’t really work that way with Mewtwo - Crunch was special and T-tar’s special attack is relatively poor. Plus ya know, Suicune.