"The trio would have been utterly shocked with such allegations. To be heaped with praise over the years and having been named in the best teams in the world then be called a chucker is an absolute insult," he said on Tuesday.
An ICC committee of former Test players, supported by scientific equipment found that almost every international bowler straightened his arm at some stage in their delivery and recommended a new rule allowing bowlers to straighten their arms by up to 15 degrees.
The ICC committee found that even Steve Harmison, Glenn McGrath and Shaun Pollock are chuckers under existing rules, while Lillee, Khan, Hadlee, Fred Trueman and Ian Botham also threw the ball.
Smith, now a television commentator, said the ICC had let the issue of chucking get out of hand over the years.
"The use of scientists has transgressed the rules to the letter of the law by degrading not only fast bowling but also Hadlee, Lillee and company who have been purists and models for bowlers," he said.
Smith who played 63 Tests and 98 one-day internationals for New Zealand from 1980-92, added that it was a "ludicrous system now that is pointing fingers at great bowlers with flippant comments".
He did not agree that the proposal to allow up to a 15-degree of bending of the bowling arm could mean injecting some excitement and entertainment into a code notorious for its rigid rules.
"Allowing bowlers to chuck the ball will also mean the dismissal of batsmen. Why should the batsmen be on the receiving end?" he said.
As a TV broadcaster, Smith and fellow commentator and former New Zealand captain Jeremy Coney caused a furore in the 2002 season when they aired their concerns about the legitimacy of the bowling action of Black Caps pace bowler Kyle Mills.
He said television played a major role in detecting illegitimate actions as in the case of Pakistani quick Shoaib Akhtar.