And it was unstable because larger CFM engines could not fit under the wing anymore so they had to put it further forward and a bit up. This increased the pitch up moment when a full power is applied.
Also, can't really see how the height of the fuselage above the ground affects fuel efficiency.
It doesn't. They wanted to use a larger, more fuel-efficient engine but the 737's ground clearance couldn't accomodate it. So they moved the engine forward.
Forgive me if I'm missing something, but isn't MCAS disabled while the flaps are extended, which is the case during takeoff and landing?
In the doomed ET302 flight they retracted flaps 62 seconds after liftoff at only about 1200ft above the ground. MCAS kicked in 5 seconds later. Had autopilot been engaged it'd also had saved them from MCAS trim down commands.