It's really interesting to see Nintendo's ambivalent relationship with Donkey Kong Country and, more broadly, with the Rare era. On the one hand, they were quick to redo all the designs as soon as Rare was sold, as if to reaffirm the series' allegiance to Nintendo. On the other hand, the latest main games position themselves as direct heirs to Rare's games, with the Park expansion making direct reference to them, and the Mario movie not only mentioning Donkey Kong Country but also making a reference to Donkey Kong 64.
At the same time, Miyamoto takes time out in a recent Nintendo Direct to talk about a marginal change to DK's design, always giving that impression that Nintendo needs to say "hey, we own that IP!" from time to time. I'm also a little intrigued by some almost bitter-sounding comments Koizumi made about Country in an interview
he gave as SM3DW's producer. A journalist asked him about the influence of Jungle Beat and he replied that he was grateful and surprised by the question, as if he somewhat believed that Westerners weren't interested in Jungle Beat...
I don't know, there seem to be conflicting feelings, even internally, about the Rare era. Nintendo keeps coming back to it, but regularly feels compelled to distance itself from it, while continuing to refer to it, but not completely, but still a little. It's just strange. Or maybe there are people internally who don't think the same way.
I don't think Nintendo had any issue with Rare's games -- they could have told Rare to change their games at any minute (they didn't allow Diddy's design for Jr. and they hated the original realistic gun in DK64, for example), they chose not to.
However internal Nintendo teams are very protective of their own creations and have a very strong design philosophy. They have a very "auter"-ish approach, but most of the time the
auter is the whole team (EAD, R&D1, EPD) instead of a single person. They probably feel inadequate to handle characters created by others, and -- while respecting the characters, worlds, and gameplay devised by others -- know that they would do it differently.
Take Jungle Beat, for instance. It would have been very, very easy to turn it into a Country-like game -- replace some of the lil' monkeys with Diddy & Dixie, some of the animals with Rambi & co., maybe throw in K. Roll as the final boss, and you're done (a competent ROM hacker could do that in less than a week, I suppose?). The first level of JB even shares the icon music of the first level from DKC, and on the surface, the two games are very similar. They took what they liked from DKC and gave their spin on it. Koizumi himself said that they wanted the new game to have EAD Tokyo personality, and that's harder to do if you are recycling characters.
The Retro games have a less radical approach, but still -- Nintendo probably gave direction on what they believed worked particularly well, and Retro built on it. As already discussed pages ago, they say what you want about their enemies, but they follow the "form-follows-function" mentality to the point, whereas sometimes Rare got lost. I'm sure Nintendo was involved there.
But everything left behind? It doesn't mean that Nintendo "hates" K. Rool, Candy, or Enguarde, just that they don't (currently?) fit their vision for the series, or that they don't feel comfortable using them for whatever reason.
If you want to make a comparison...
Goof Troop was a 90s TV series developed by the TV division of Disney. The series gave Goofy a son (Max) and moved him away from the "classic" universe -- the character was redesigned, and his old pals Mickey and Donald were never mentioned. Pete was his neighbor, and he also had a wife, a daughter, and a son.
At some point, Disney decided to make a movie out of Goof Troop, and their "main" division got involved (WDFA, now WDAS). WDAS was the "proper" creator of Goofy. They were (are) Disney's EAD -- the team who created Goofy in the first place for those old animated shorts. Under their vision, "Goof Troop - The Movie" became "A Goofy Movie". The main character was re-designed, Mickey & Donald had some cameos, and other elements were dropped (most of Pete's family). Just like EAD, WDAS is a team with a very strong identity and values. They respected the work of the TV division, but at the same time, they wanted to make
their project and distance themselves from some elements.