So to say that they weren't excited to work with D&D - in your case - is a severe misunderstanding of what D&D actually is, and therefore bullshit.
If you decide to call someones opinion "bullshit", then you show more of your character than you might want to and you don't really encourage others to interact with you. Just saying.
I don't think the ruleset restrictions is the only problem but all the other decisions they made. They wanted to add a lot of traumatic topics like SA but failed to handle it with the needed care and sensitivity.
To me personally (and I'm saying that without any evidence) it feels like they aimed for a big shot to gain popularity, to be a part of the holy grail and in doing so, they never even asked themselves if their were capable of doing so or if they maybe couldn't keep it up for the time needed. In addition to that, the fans they attracted (especially all the fans that bought the game based on all the bear sex and Dark Urge violence news after last PFH) have proved to be way more fanatic and obsessive then they maybe even expected.
I can see the team burning out after all the feedback, the threats and such - thus adding to an already questionable state of the team.
Again, this are just my thoughts, I don't have any evidence but I try to take a different approach than just "Larian good, Hasbro evil, accept it or leave".