The real answer is because of the toxic relationship between the near absolute power of a producer and the creative staff. Producers are equal parts the best and worst thing to happen to video games, because they are essentially the viceroys of the publisher, studio, what have you. They set important benchmarks and hold the purse strings so that the inherently creative don't dawdle and procrastinate and actually stay clear to a linear vision. In some cases during disputes with the powers that be, producers are the first and last line of defense for their creative staff, since they are in a unique position to represent the publisher/studio/what have you's best interests, yet spend time in the trenches, so to speak, and are intimately aware and have the unique perspective to be empathetic to the realities of video game development.
But because they are representatives of the business end of the relationship they have a degree of authority that is absolute and the best producers are the ones that recognize that their talents are for supervision, administration, and task delegation, interfering only when they are certain and defering to the wisdom of people whose career and academic path were whatever their assigned task is.
This is where Casey Hudson comes in, a guy with the absolute power of a producer with the creative depth of a pond and the subtlety of a four year old that was told to look but not touch in a candy shop. Casey Hudson, according to all leaks, rumors, and discussions, was precisely the kind of producer I've seen on more than one occasion, who let the fact that in his position of authority he felt that it was his obligation to interfere on matters that he, personally, thought were "cool".
As the story goes, Casey had just watched 2001 A Space Odyssey for the first time and was so inspired by what he saw that he saw absolutely no reason that he could not blaze a trail by boldly going with the video game under his command where other people had largely gone before. Deciding all at once, fueled by some sort of ADD addled blitz, that he wanted to be unique by copying one of the most storied and legendary science fiction films of the 20th century, he informed all the writers that he and Mac Walters (the lead writer) were going to spearhead a rewrite of the ending.
Understand also that this comes at the heels of kind of a creative upset at Bioware. Many of the oldguard had left and Drew Karpyshyn had left behind his notes for Mass Effect, but he too had left, leaving some restructuring and chaos in his wake.
A lot of what /u/duntadaman had said is correct, though it was not nearly as well refined and the writers were still working to put together what he had left. A lot of that original plot was built in wide sweeping abstracts, general overtones without being as well polished as /u/duntadaman had put it, but the talented Mass Effect writers were, indeed, working on it.
And let me stress that Drew Karpyshyn, despite what our nostalgia goggles would have us believe, was not necessarily a "great" writer. His novels were not very good and when he got directly behind the wheel he often times hamfisted things with absolutely no regard to nuance. But what he was a savant at, it seemed, was coming up with good ideas and directing his writers in how to polish them into excellent final products. He could go find the raw gemstones, so to speak, and talk his writers into making perfect cuts.
So Drew is gone, the old doctors that founded Bioware are gone, and there's very little venerated authority left to protect the creative path of the game that had informed the creation of Mass Effect 1's narrative.
Toss that chaos in with Casey Hudson's manic attempt to be the next Stanley Kubrick and he literally locked the writers out of his rewrites, where he thought that this was the perfect platform for his delirious narrative about transcendent humanity and quasi forerunners and all those other tropes that he had read online but thought that he was coming up with for the first time.
While I don't know for certain, this was passed around as allegedly the extensive "notes" that Hudson used to outline his ending.
Hudson, oblivious to the complexities of creating a coherent, trilogy narrative built on a series of significant character choices and detached from the gaming community (indeed a cursory glance at his Twitter indicated a total disconnect from the outcry against the ending, not of cognitive dissonance, but such a disregard for the culture of gaming in general that I believe he truly was ignorant to the faults of the finale), was entirely pleased with what he saw as a climactic end to Mass Effect's story.
But the sad thing is it wasn't an end to Shepard's story, it was an end to Casey Hudson's story, the story he wanted to tell that may very well have been engaging and intriguing in his own small one off game put on Steam Greenlight. He wanted to tell the hard story of humanity having to choose which path to take at the end of a long journey, to retain its unique, organic origins at the cost of becoming gods among the stars, or to abandon its history and its very place to transcend and become something more. Under good writers this could be interesting, but that is not what Shepard's story was about, and Mass Effect was a story first and foremost about Commander Shepard and the relationships he formed along his journey.
And unfortunately Casey had absolutely no idea what he was doing, but the absolute authority he wielded in the capacity of a producer stopped anyone from being able to interfere. Who had the veterancy on the team in addition to the passion for the project to look the commander of the coin purse in the eyes and say, "No, this is fucking retarded"? The answer was pretty much no one.

(Part 2)
As a post script, the principle faults of the ending can be summed up like this:
-Eleventh hour plot twists that change the entire scope of the narrative are bad.
The climax of a story comes at what you can largely call the 10th or 11th hour of the plot. It is where all the build up happens, the tension reaches its zenith, and all cylinders fire so that all the build up can be released. Vaguely erotic sounding, sure, but there's a reason we call the orgasm a climax. It's not the end of the story by any means, it's where the volcano erupts.
Once you get to the climax certain narrative elements are supposed to be set in stone, because you have gone into this story with a certain expectation and this is where those expectations are satisfied.
The climax of the story was the fateful battle for Earth and the near disaster of Shepard's final run that was foiled by Harbinger. Following this climax is supposed to be the resolution. The volcano has burst and now we watch where the ash is going to settle. You can't just suddenly take away the volcano or make the ash do inhuman things during the resolution, you're supposed to tell us what the consequences were of all our actions.
By introducing the Catalyst it changes the game. The Reapers, which had been the unholy, Lovecraftian, eldritch threat throughout the entire series were, at the moment of triumph, turned about so that the heel were now the victims and you were asked to feel guilty about what you'd done and consider their point of view through information that was not available throughout the game.
Without doing your due diligence and planting the seeds prior in the game so that we could piece together this information you, as a writer, have no right to impose any kind of moral demand on the players to consider the Reapers as anything during the 11th hour than the draconian, cataclysmic threat that they are.
-In the original ending there was no room for anything but gloom
In the original ending, before the all but mandatory extended cut DLC, a choice of the red ending essentially reset the series to the 20th century. Sure, you may think, the 20th century isn't so bad. But the entire wonder and magic of the universe was taken away as soon as the Mass Relays were destroyed and the entire galaxy was now disconnected from one another, the bulk of their armies and fleets left on a shattered earth that could not support them.
This may seem like a small thing, but consider how much of Mass Effect's success was based on the idea of immersively "head canoning" what was going on in the galaxy, imagining the part you and ostensibly Shepard played in the galaxy. By choosing the ending that the game had emotionally built for you you destroyed the galaxy and the wonder that you had felt comes to a grinding halt. It's gloomy and depressing because you cannot imagine what happens in Mass Effect after the Reapers are gone, because effectively, there is no galaxy after the Reapers are gone, and this is an outrage.
-The choices clash thematically with the game
The game was about humanity earning its place among the skeptical species within the stars, banding together, and overcoming an existential threat, unifying the organic races against eldritch super machines that held you in such little regard that they could not conjure the effort to even be disinterested in your curiosity as to why they were destroying everything you had ever known.
Stories are kind of like building a very simple house. The foundation is the basis upon which everything is placed and each brick supports the brick on top of it which supports the roof. If the building is longer than it is wide and faces east to west you simply cannot put a north to south roof on it because it wasn't designed to support that.
The ending was not constructed in such a way to support these themes, so they clashed violently and took you immediately out of the moment. Factor in the fact that your options were so out of left field as to be considered magical and you have people that turn off the computer or the console in a straight rage. Even though most of the game was built on principally faux science, it always followed a consistent attempt to logically explain things in ways we could understand with a hint of hand waving. Nothing had been done to tell us that a green beam could magically alter the DNA through mere proximity of the entire universe so that everyone inside was now somehow part machine, for instance. What had been hard, logical sci fi out of nowhere suddenly transformed into a mystical fix all beam.
And none of it made any sense, as we slowly watched everything that we had spent 100+ hours meticulously preparing ourselves for slip further and further away, the culmination of our fight against the reapers disappearing down a tunnel as we listened to Casey Hudson's ham fisted attempt to explain why he was doing a better job of telling the story of 2001 A Space Odyssey while our story died around us.