Errr...not really.
EU261 came about when the late Loyola de Palacio was Transport Commissioner and although it may not be helpful to land "blame", if this sits with any airline then it is Iberia. She had experienced her own problems with disruption including being stranded at Brussels one Friday night but was persuaded to take action after her Chief of Staff was bumped three times in fairly short order from flights. There is a good account of how this came about back in the history of PPrune
here which doesn't need any re-telling.
LCCs weren't really into the holiday market back in 2004 in the way that they are now. The prevalence of the likes of Ryanair and easyJet in the holiday market was in its infancy.