I'll come back to the LGBT+ representation in SPOP.
You see, I wondered why this representation is so… "awkward," when we were promised an LGBT+-coded series, derived from a franchise known for being gay and queer-coded, and with the added bonus of a showrunner and writers who are themselves gay, lesbian, bi, trans, queer, etc. So I find it very strange that they were so timid in their representation, even problematic (hello Double Trouble!), especially compared to other animated series aimed at children released at the same time.
And I can only see two possible answers:
1- Fear of censorship. Perhaps Nate and his team wanted to avoid scaring producers or broadcasters, and not wanting their series to be censored or canceled, they deliberately reduced the number of LGBT+ characters. For example, during production, Perfuma was supposed to feature a trans girl, but fearing the producers' reaction, they backed off and made just a cis girl. We can also imagine that after three seasons of restricting themselves, they were then much freer (albeit belatedly) to include LGBT+ characters. Think, for example, of the Netossa-Spinnerella couple, who were almost invisible during the first three seasons, only to become, belatedly, much more visible in the final two seasons. However, I think this fear is unfounded since I think producers and broadcasters are aware of the expectations and LGBT+ representation of the series and the franchise and probably accepted it, or even saw it as good publicity.
2- Laziness. So this is my personal theory, but I have the impression that Nate and his team deliberately did the minimum in terms of quality LGBT+ representation. Nate was focused solely on his incestuous fanfic, and he and his team must have figured there was no need to do a lot of work on LGBT+ representation because, with the lack of representation in children's media and an enthusiastic fanbase, even the most problematic queerbaiting would be acceptable and could generate buzz. Take, for example, the character of Double Trouble, who has already received several criticisms for theirs portrayal of non-binary people (depicted as monstrous, just a plot device, possible anti-Semitic imagery, etc.), but these same criticisms were drowned out by a flood of praise from LGBT+ audiences, including non-binary and cis-straight audiences, because non-binary characters are still rare in children's productions. And I suppose Nate and his team also figured that in case audiences were lacking representation, they could always add extra information as fanservice.
So whether it's the 1st solution, the 2nd or both solutions at the same time, it leads a series that wants to be LGBT+ to have only one gay couple (rarely present), many more lesbian couples (including one very problematic), characters whose bisexuality is well hidden, a trans character whose transidentity is not possible to guess without going through a wiki search, an ultra-problematic non-binary character, and zero ace/aro characters in the cast !
I want to make the jump and speculate the answer is both of your theories together, because one is the consequence of the other.
Let me explain. I'm sure the crew-ra knew if they made the first seasons of the show too gay Netflix would have tried to stop them and maybe cut short the amount of episodes they had. Because of this, they just didn't try as much as they could have. They placed Spinnerella and Netossa in the background, gave one episode where Bow's dads were important and used all the runtime and animation budget on c//a.
It sucks that they didn't have full control of the show, but at the same time that's not an excuse for the poor representation. Remember when Huntara was introduced and Adora immediately had sparkling eyes for her? Would have killed the writers to make Glimme react in a similar way? Or what if we actually got to meet Sea Hawk's ex boyfriend (with a different name, please) instead of him being a voiceless background character?
Honestly the problem isn't just the characters not being allowed to be gay on screen. Some of them were poorly written in general. Sea Hawk makes me cry whenever I think about how cool he was in the og show; Spinnerella and Netossa were just there, when they could have been more developed together or separately. And the princesses. Oh God the PRINCESSES-! 🤬