The point is that Bioware lost focus. Instead of refining the weaknesses of ME1 while expanding on what made ME1 great, they choose to focus mainly on the shooter demographic which meant they had to take out the core RPG elements (like exploration).
So it had nothing to do with them not having enough time or resources but rather them not sticking with the formula.
If the leaks are to be true, ME4 is taking more inspiration from ME1 and not ME2 or even ME3 for that matter. I say thank God!
Combat is the primary means of interaction in Mass Effect (and BioWare games in general). It had to be a priority. When your game design requires the player to gun down a battalion of Geth, mercenaries, and husks it needs to be at least halfway decent. ME1 was abysmal.
ME1 is a classic example of a developer overextending themselves and delivering a game that had severe problems across the board. There is bad implementation piled on top of bad design.
-Terrible combat
-RPG elements that were both shallow and poorly implemented
-Possibly the worst inventory ever
-Very poor loot
-Exploration that consisted of boring filler in lifeless terra-gen wastelands and sidequest asset reuse rivaling DA2
-Severe technical problems
What exactly made ME1 "great" and what is the "formula" here? Is it to spread yourself thin again and only be able to make marginal improvements to bad mechanics and hope that you'll get away with it again? You can't handwave away having to deal with all that with finite resources with vaguely "refining weaknesses" here.
You say that BioWare lost focus. However the core of ME1 was the story missions which consisted of TPS combat and the NPC interaction through the dialogue trees. This is what they focused their limited resources on and they consolidated their resources there to work on more robust scenarios and a more interesting cast in ME2. Mordin and Legion's content contained more meaningful world building than all the uncharted worlds combined.
What they dropped was wandering boring not-Mars planet #35 picking up Matriarch writing #43 on the way to copy-paste dungeon #8 in the poorly implemented, tacked-on, optional exploration and tedious RPG elements like the loot. The exploration was very bad and requires significant investment to do right (there is also reason to believe that this is outside BW's skillset) and things like looting were superfluous anyways.
Also if we want to talk about meaningful RPG elements for the next ME game we should look more at what Alpha Protocol and Deus Ex: Human Revolution did right and less at ME1's shallow boring features.