Ragheb criticized Morsi for not taking action on a package of proposals to overhaul the judiciary that would address issues of justice and retribution for the families of those killed in last year's uprising, and included replacing the prosecutor general.
"It was badly managed," Ragheb said. "Mahmoud has now been given an undeserved status as a hero of judicial independence."
Many Egyptian activists accuse Mahmoud of having failed, either intentionally or due to incompetence, to present a strong case against those accused of abuses during the revolution.
Meanwhile, Morsi is facing unprecedented public discontent.
The judicial standoff was the backdrop to rival rallies Friday in Cairo's central Tahrir square that escalated into street fighting between Morsi's supporters and his critics, the first such confrontation since he came to office in late June.
Pro-Morsi protesters, rallying to urge the removal of Mahmoud, clashed with a planned anti-Morsi demonstration denouncing the lack of progress on economic issues and a hotly contested constitution stuck in a drafting process.
Morsi's supporters say the constitutional drafting panel was set up by an elected parliament and broadly represents Egypt's political factions. Critics say the process is dominated by a majority made up of Islamists, such as the Muslim Brotherhood from which Morsi hails and more radical groups, when it should be determined by consensus.
Liberals and secularists also fear that Morsi's foray into the affairs of the judiciary show he is amassing too much power, especially as he retains legislative authority in the absence of a parliament, which was dissolved just before his electoral victory.
Over 100 protesters were injured in the clashes, while police were nowhere in sight. Morsi's spokesman Yasser Ali said Saturday that the presidency was "displeased" with the violence, adding that "dialogue" should remain the basis for resolving disagreements.
Islamist expert Ammar Ali Hassan said Morsi's decision to back down from a showdown with the judiciary may have been partly influenced by the clashes, which he calls a sign of growing public displeasure.
"He didn't have other options but to back down. The alternative would have been an open conflict with the judiciary, a round I imagine he can't go through, particularly with the visible discontent from the various political groups with the emerging new authority," Hassan said.
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