I haven't tested this but the mage command is based on the Magento Connect Downloader. The downloader itself does not play well with changes that did't happen through it. For example if you installed an extension by deploying the files directly and then tried to install the same extension via the the downloader (or any other extension that happens to have the same file) it would error out because it can't handle the existing files and will not overwrite them.
This obviously becomes problematic once you throw security patches into the mix.
- Install Magento 1.x
- Apply Security X patch that creates file Y
- At a later time try to upgrade to Magento 1.x + 1 (which presumably has the security patch, file Y included) you would encounter the existing file error.
I am not 100% if modifications are problematic too (the pear package definitions do include checksums).
So my guess, once they realised the issues with the upgrade process they started moving away from it (undoing all the patches to then be able to upgrade, to then selectively re-apply patches doesn't sound that great a process).