Steps of Faith didn't offer any rewards. If they were going to have two versions they'd need to add in rewards to the tougher version because no one would do outside of completing it (if even that). Nerfing it was the best option because it wasn't ever intended to be "hardcore" content but a story trial. And it's not as if SE nerfed it because it was actually hard (it wasn't) but because people are generally stupid.
As for why the Xaela are are tiny as the Raen; The answer simple: They didn't want to make two unique sets of assets (8-unique face models (est. 20+ features for each), two body models*) not to mention it'd be unfair for the females to get two versions while men get one. And if they give the males two unique versions you're looking at 16 unique face models, four body models*, and probably unique animations for each.
And Highlanders are a unique case because they came from 1.0 and were originally male-only. The ladies didn't come in until 2.0*.
*This depends on if the Au Ra are actually going to get unique body models at all. As it is currently in-game all female (excluding Lalafell, who use the same models for the most part between male/female) have the exact same body model (outside of being naked and racial gear) for their armor. So, fem highlanders are really only unique in their facial model.
