Communication overhead is a big thing in teams. If you have a struggling team, halve the size. It's crazy how well that works. It's not the people but the number of them. Once your people are consumed by the day to day frustrations of having to communicate with everyone else and with all the infighting, posturing, etc. that comes with that, they'll get nothing done. Splitting teams is an easy to implement fix. Minimize the communication paths between the two (or more) teams and carve up what they work on and suddenly shit gets done.

In this case, they probably were trying to not just rewrite but improve the engine at the same time. That's a much more complicated thing to achieve. Especially when the original is a heavily optimized and probably somewhat hard to reason about blob of assembly. I'm guessing that even wrapping your head around that would be a significant job.

Amazingly enjoyable game btw. Killed quite a few hours with that one around 2000.