For the simple reason that stop-motion animation is very time-consuming and expensive today. Corpse Bride and Wallace and Gromit: The Curse of the Were-Rabbit are the only two even remotely recent feature-length stop-motion animated films, and both took literally years and years to make. CGI is just easier and cheaper today.
Besides, having actually seen this, I can say with confidence that aside from one or two continuity problems with the original (Irontail's name and the fact Antoine is suddenly a caterpillar again), Here Comes Peter Cottontail: The Movie isn't actually that bad. I only bought it because it was the only way I could, at the time, acquire the original film on DVD, and I fully expected it to be terrible, full of "hip" pop culture referances that would instantly date it. It manages to be, shock of shocks, a cute and almost completely innocent movie, particularly the character interaction between Junior, Flutter and Munch.
I could have done without the character of Jackie Frost though, and the "let's freeze the world" plot has indeed been done a zillion times over, but when all is said and done I can't find anything in the film that makes it "garbage." It's intended for children, and I think you're being too critical of it.
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