Ah, you're right. B would be the utility monster. Not because A's normalized utilities are lower, but because the intervals between them are shorter. I could go into more detail in a top-level Discussion post, but I think we're basically in agreement here.

Also, if A's highest preference has no chance of being an outcome then isn't the solution to fix A's utility function instead of favoring B's achievable preferences?

Well, now you're abandoning the program of normalizing utilities and averaging them, the inadequacy of which program this thought experiment was meant to demonstrate.