I heard the same things that Simba's Mom cited. By the end, it was just too hard to maintain the costumes that were 5(?) years old from TON/TOD.
Back in March '03 when the parade ended, there were already rumors here that Disney had hired someone to create a new parade for Epcot. Still waiting...
I've heard many people say that they found it very hard to navigate the World Showcase aroud parade time. You could probably make the same argument for any of the theme parks to some degree, but perhaps this perception is playing some role in the decision to not have a parade there. After all, the WS is one of the more...adult...areas of the four theme parks.
Our family had a wonderful TOD experience several years ago. DS was 1.5 and it was his first trip to WDW. First night was at Epcot. It stormed mercilessly about 4 hours before parade time and many guests left the park. But the weather was perfect for the parade, and about 1/3 of the performers that walked by gave DS a wave, shook his hand or otherwise interacted with him. Watching the videos now and only seeing about 15-20 other WDW guests in the field of vision...you can help but realize it was a once-in-a-lifetime experience.
Anyway, I'd love to see a similarly-themed parade someday. The Disney characters are great...but it's nice to see WDW stretch its wings at times, too.