You know the story of the first ever acid trip? Albert Hoffman had been feeding LSD-laced sugar to rats to test for toxicity, cleaned the spoon, saw that there were one or two sugar granules on the spoon, so he licked them off? The reason he did so was that everybody "knew" that there was no known chemical, no even imaginable chemical, that could have a perceptible effect on the human body in doses measured in micrograms. The chemically active dose for any known drug, at the time, was a thousand times that. So when it was discovered that LSD had such an immense effect, at doses as low as a few dozen micrograms, it was deeply fascinating to research psychologists. Receptor-site chemistry was still decades away, and until then, nobody could even imagine how diluting a dose that small in something as big as the human bloodstream could possibly do anything. And yet there it was.

Also, remember that the MK ULTRA program was an attempt by the government to reverse-engineer the "brainwashing" technology that they "knew" had been used on our soldiers who continued to insist that the Communists had shown them evidence of US war crimes in Korea, even after they were home. Since everybody "knew" that it couldn't possibly be true, they must have been somehow hypnotized into believing such a thing. So our government wanted to know how they did it. Well, one thing that the CIA "knew" was that the Soviet Union had ordered millions of doses of LSD from the manufacturer. (The CIA agent copied the order down wrong. The actual order was much smaller.) So the assumption was that the Communists must have been using high-dose LSD as part of the brainwashing program.

Sources: Hoffman, LSD: My Problem Child; Lee & Shlain, Acid Dreams: The Complete Social History of LSD: The Sixties, the CIA, and Beyond. Plus more articles on the subject since then that I can't remember off hand.

InfamousBrad, touches on it, but LSD was not the only drug being used by the CIA in MKUltra. Drugs like DMT, Peyote, Mescaline, and early on even Marijuana. MKUltra was largely started as a "truth serum" search to aid in interrogation. With the weed, they figured it might work to make them mellowed out. Nope, the paranoia got to them first.

With LSD, it was that the drug was just so damn potent. literally a speck of LSD would be enough to fry your brain for hours and there really was no idea what it was doing or what it's capabilities were. By the early 1950's the drug had only been around for 12 years in a laboratory setting, and so there wasn't much known about it.

With its incredible potency, they tried everything with it. Interrogations, mind control, non-lethal weapons. In the already cited work, Acid Dreams, they tested to see how they could disperse it in subways, add it to reservoirs (scientists said the chlorine in the water would neutralize it and allegedly the CIA found a workaround!), blackmail, political operations (they wanted to dose Castro and make him go crazy).

There were so many possibilities, that they couldn't do it all themselves, so they started paying college professors and universities to do the research for them. Of course we all know now that Timothy Leary was one of those professors. They were known to go on benders with LSD that would make a Hunter S. Thompson blanch.

In essence they saw LSD as a wunderdrug with so many possibilities that they went crazy with their experiments to the point it honestly went crazy and out of their control.