The problem with prequel settings is that if it is set during a major event like the Rachni Wars, the Krogan Rebellion, or the First Contact War...anyone who played the Shepard trilogy knows how it is all going to end. We would know for example that a FCW prequel is going to end with the Council intervening before the Turians can drop the hammer. Other than for new players unfamiliar with the first three games, that would remove much of the suspense or drama from the story. It would also severely limit player agency, as you're now playing through a series of events with an already established outcome.
That makes a couple of storytelling and game-making claims I'm not terribly comfortable with.
One is that the only story that matters is high politics and grand strategy: who wins wars, who gets wiped out, and suchlike things. I don't think that's the case at all. Not everybody on the winning side of a war lives through it; not everybody on the losing side dies. It didn't hurt the drama of
Saving Private Ryan to know that the Americans won the war in the end. We might know that the Council eventually defeats the rachni, but does this particular team of soldiers live through it? What happens to them? What are the relationships between themselves, their allies, and their foes?
The other claim is related, namely: the claim that it robs player agency to not have fiat over the world-shaking changes like
the outcome of the entire war. That's ridiculous. Awarding that kind of agency to individual soldiers is preposterous, and it's one of the things about
Mass Effect's (and to a lesser extent
Dragon Age's) story that makes me most uncomfortable. For one thing, agency does not imply causation: you can make a choice, but it might not have the impact you want it to, if it has any impact at all. That you made the choice in the first place is the more important and interesting element of the roleplay, because it demonstrates something about your character. For another, agency does not imply total control over all aspects of a setting: the ability to establish relationships with NPCs, or to choose the way in which your particular corner of the war goes, is a long way away from being the arbiter of races and of the whole galaxy.
I don't think that a
Mass Effect prequel is likely for some time, because they've created this setting and to go backwards in time would be to contract it (as you rightly pointed out); they've made all these races and it would be a shame not to put them to good use. But agency, I think, has nothing to do with it. They could very well make an excellent prequel game with a fresh storyline and a great deal of player agency. But they probably won't.