Some guesses here:

First off, Itanium was definitely meant to be the 64-bit successor to x86 (that's why it's called IA-64 after all), and moving from 32-bit to 64-bit would absolutely have been a killer feature. It's basically only after the underwhelming launch of Itanium that AMD comes out with AMD64, which becomes the actual 64-bit version of x86; once that comes out, the 64-bitness of Itanium is no longer a differentiation.

Second... given that Itanium basically implements every weird architecture feature you've ever heard of, my guess is that they decided they had the resources to make all of this stuff work. And they got into a bubble where they just simply ignored any countervailing viewpoints anytime someone brought up a problem. (This does seem to be a particular specialty of Intel.)

Third, there's definitely a baseline assumption of a sufficiently-smart compiler. And my understanding is that the Intel compiler was actually halfway decent at Itanium, whereas gcc was absolute shit at it. So while some aspects of the design are necessarily inferior (a sufficiently-smart compiler will never be as good at hardware at scavenging ILP, hardware architects, so please stop trying to foist that job on us compiler writers), it actually did do reasonably well on performance in the HPC sector.