The hammer existed in the old Graal The Adventure PC game (the game in which Classic is based off of, originally called Zelda Online).
It's assumed the hammer will one day be added. But there's a lot of things in Classic that hint at things that don't actually exist (Tears of Hera, for example), or things that have been around for a long time but serve no purpose (the big chest south of mod town, the golden gate). You'll get used to it.