The producers said that the impetus for changing the focus of HG:TAS came from Bandai, who planned to market a series of action figures and toys based on the show. Bandai had previously made (via their animation arm Sunrise) Armored Trooper VOTOMS, which was one of the primary inspirations for the Heavy Gear pen-&-paper game. But Bandai didn't have the merchandising rights to VOTOMS; that belonged to Bandai's rival Takara (now Tomy). So the last thing Bandai wanted to see from Sony was a remake (or a perceived remake!) of VOTOMS, especially as Bandai was also keen about the possibility of releasing a version of HG:TAS in Japan. That would have opened Bandai up for a lawsuit like the kind that flared between Playmates and Tyco over the Exo-Squad/Robotech and Battletech toy product lines.
One excuse that was offered about HG:TAS in the past was that the show isn't ABOUT Terranova (the setting of Heavy Gear the games)--it's a show FROM Terranova. I'll have to see more of it to decide how well that argument works.
The producers have also said that they had high hopes for the show...adding more duelist teams, having different adventures, adding new Gear robot designs and so on.