In a statement on Tuesday, the Swedish parliament's chief ombudsman called the operation "illegal".
Lawmakers and human rights groups have criticised the country for sending asylum seekers Ahmad Agiza and Muhammad Alziry back to their home country, where they were imprisoned on terrorist charges.
The fact that the extradition was handled by US agents has raised questions about whether Sweden surrendered too much authority to foreign officials.
Mats Melin, the parliament's ombudsman of justice, said the security police force deserves "severe criticism for its handling of the case", adding that it "lost control of the situation at the airport and during the transport to Egypt" in December 2001.
"The American security personnel took charge and were allowed to perform the security check on their own," Melin said in a report ordered by parliament.
"Such total surrender of power to exercise public authority on Swedish territory is clearly contrary to Swedish law."
At Stockholm's Bromma Airport, Swedish officials handed over the two men to American officials wearing black masks who took the two suspects into a small room and cut off their clothes with scissors, replacing them with prisoner uniforms, before placing them on a US-registered Gulfstream jet.
Melin's report said "their bodies were searched, their hands and feet were fettered, they were dressed in overalls and their heads were covered with loosely fitted hoods.
"The American security personnel took charge and were allowed to perform the security check on their own. Such total surrender of power to exercise public authority on Swedish territory is clearly contrary to Swedish law"
Mats Melin, Swedish parliament's ombudsman of justice
"Finally, they were taken, with bare feet, to the airplane where they were strapped to mattresses. They were kept in this position during the entire flight to Egypt."
The report added that "at least some of the coercive measures taken during the security check were not in conformity with Swedish law".
However, Melin told reporters in Stockholm that he did not plan to press charges in the case.
The US agents' treatment of Agiza and Alziry was first reported by an investigative programme on Swedish channel TV4 in May last year.
Security officials did not immediately comment on the report.
The Swedish government has acknowledged that both asylum seekers had a well-founded fear of being persecuted if returned to Egypt.
However, the men were excluded from refugee status based on evidence that they were associated with Islamist groups responsible for acts of terrorism.
The same Gulfstream jet used at Bromma Airport has reportedly been used by the CIA to ferry alleged terrorists to countries that are believed to torture prisoners.
The CIA jet has allegedly ferried
suspects to Guantanamo Bay
Human rights groups say the plane - which critics have nicknamed "Air CIA" and "The Guantanamo Express" - is a key piece of what they say is the US government's "torture by proxy" programme.
Agiza was convicted by Egypt's Supreme Military Court last April of belonging to and leading an outlawed group aiming to overthrow the government.
He was sentenced to 25 years on the same charge in 1999 while he was in exile in Sweden.
Alziry was released from an Egyptian prison last October.