I understand that the brothers endured a lot of tough challenges, especially from Loki (who tried to disturb them in the form of a fly).

But still, Mjölnir is clearly faulty, which is supported by this quote from The Prose Edda, translated by Arthur Gilchrist Brodeur (1916):

Then he gave the hammer to Thor, and said that Thor might smite as hard as he desired, whatsoever might be before him, and the hammer would not fail; and if he threw it at anything, it would never miss, and never fly so far as not to return to his hand; and if be desired, he might keep it in his sark, it was so small; but indeed it was a flaw in the hammer that the fore-haft was somewhat short.

So, a bet is a bet, and when it is betted upon a head, it should/would be much more intolerant.

So, why and how did the brothers won the bet when the hammer is clearly faulty? On what criterion is the quality/bet gauged?