If by this you mean that diaspora Jews considered certain books inspired that were not held as inspired by the Judaean Jewish community (which used a stricter criteria), then yes.
Also, would it be fair to state that if one accepts as canonical the Palestinian canon upon which the Protestant Bible is based then one is forced to admit Matthew's emphasis on the Virgin-Birth of Jesus lacks support from Isaiah?
Yes and no. Even if you hold Isaiah 7:14 to be a prophecy of the birth of Jesus, the expression "young woman" does not preclude the woman in question from being a virgin.
Put simply, wouldn't there be a discrepency between the way Matthew qoutes the verse and the way the verse itself appears in Isaiah?
This is hardly the only discrepancy between the gospels and the Hebrew scriptures.
Sorry, I'm not making myself clear. Let me try again. The issue is not whether Isaiah precludes the possibility the Messiah would be born of a virgin, the issue is that Matthew SAYS scripture explicitly states he would be born of a virgin. The Palestinian canon, it is my understanding, DOES NOT explicitly state the Messiah will be born of a virgin. Hence, given the Protestant canon derives from the Palestinian canon, there is a descrepency between what Matthew SAYS scripture says, and what that scripture actually says.
In other words, if I were a good Berean and brought to my reading of Matthew the same sort of empirical literalism as some in our day and age bring to the reading of Scripture, it seems to me my first reaction would be to demand of Matthew, "Scripture, please," and then accuse him of adding to scripture.