As a Magnum or a Murder She Wrote episode, this episode wasn't that great. The story makes no sense, nobody knows what happens, and it doesn't get resolved.
But I think that's the joke. The whole joke is about what a detective is, and how they work their deductions. I imagine the writers had a lot of fun writing this and it's just so much fun seeing Magnum and Jessica together.
Sure, they could have "worked together" and gotten along, but it wouldn't have been this witty TV Essay.
It's like the set pieces of an episode are there: pursuit, disparition, discovery, gun fight. But it's all running on empty. The real action is in the dialogues and each character alleging they are the victim.
And who Jessica Walter hitting on Magnum!!?? Amazing.
It's either a no so great episode or a brilliant TV crossover Essay. I'll take the second interpretation.