Balshaw, who came on as a replacement during that final 12 years ago where Jonny Wilkinson broke Australian hearts in Sydney, knows better than most what it takes to win a World Cup -- and fears the hosts may come up short.
"I'd like to see a few more guys in there with the X-factor," Balshaw told Reuters. "I think you should have your best team on the pitch."
Balshaw, who spent the latter part of his career in France and who still lives in Biarritz, said he was disappointed England had not picked Steffon Armitage for the squad, the player excluded because he plies his trade in France.
Lancaster could have invoked an 'exceptional circumstance' clause to allow selection of the Toulon powerhouse, but chose to stick to the letter of the RFU law prohibiting selection of non-England based players.
"The guys in France, they are playing for some of the best clubs in France, but Stuart is the guy who makes the rules," Balshaw said.
Similarly, Balshaw thinks the decision to omit Dylan Hartley for a disciplinary breach which meant he would miss the first week through suspension, will hurt England.
"We desperately need our lineouts to function," Balshaw said of England's shaky recent form in that area.
"Unfortunately Stuart has set his stall out early and has not picked the players he could have picked.
"As I've said, you want the X-factor in your own World Cup. We don't know what is going to happen... in hindsight we could say 'if only he picked Hartley, if only he picked Armitage'... but he (Lancaster) stuck by what he said."
'ABUNDANCE OF TALENT'
Balshaw said England has an abundance of talent and a "very, very good team" but that their lack of experience would be a weakness which may haunt the hosts.
That lack of experience is especially evident in the selection of Sam Burgess at centre, with just two caps to his name and less than a year of union under his belt after switching from rugby league.
"I think the group they have got has really bought into what Stuart is about," Balshaw said, dismissing a suggestion players may resent the fast-tracking of Burgess into the England set-up on the back of a handful of games for Bath.
"I feel very sorry for (Luther) Burrell," he said of the player who lost his place to Burgess.
"He's performed very strongly for England, and Northampton. I was surprised he wasn't picked. I think for Sam there is no doubt he is one hell of an athlete, a rugby player.
"The danger is in the latter stages against world class centres, is he going to be able to cut it tactically? Is he going to put people into space at that level?
"Look at Sonny Bill Williams - he played three years union before he became an All Black. I think in this World Cup with the inexperience we have Burrell would have been very useful."
England open the World Cup on Friday night with a Group A match against Fiji, a team Balshaw says will provide plenty of surprises.
"I don't think we'll lose to them but some of them are genetic freaks. If the game gets loose, these guys are so talented and they could hurt us.
"They will want to set a statement - and I think they will give us a good run for our money."
(Editing by: Mitch Phillips)
