Secondly, I perfectly understand that the ability doesn't affect units that are standing next to the target stack (perhaps I misunderstood your point? Clarify if needed), but if they are in the path of the riders, they will be hit, and even the target stack itself will be affected if the riders run past it before the attack. And we shouldn't forget that riders don't always run in a straight line; there are various obstacles that change their movement trajectory (including enemy units, which can also be affected).
But I'm not defending Alt-Greed in any way, as I personally lean more towards ignoring defense.