A Plan has a formula equal to:

1.5% * svc (limited to 40 years) * avg pay

less

66 2/3% of Soc Sec Ben.

The offset in its current version does not seem to be a fixed formula or a unit credit formula. It would appear that the 66 2/3% would either have to be prorated for service under 40 or would have to accrue at say 1 2/3% per year for a max of 40 years/ What do you think? Is there an omission in the formula? Is it illegal since it doesn't explicitly include one of the above?

Not necessarily.
Perhaps it would be worthwhile to re-check the plan doc w/r/t to definition of "accrued benefit". Yes the formula would appear to be a problem with respect to the accrual rules of IRC 411 (assuming this plan is subject to 411), but there may (should) be another definition in the plan to describe the accrued benefit at any age. (In many plans, the formula defines the benefit at NRD and the accrued benefit definition describes how that formula is applied at other ages.)