I always thought it was due to the TP the avatars gave to the mob not being worth the damage or something like that?

As someone who's main was SMN, it wouldn't have changed that much if the prep cost was removed - it would have just had less MP for other things due to a max mp reduction.

There was also equip to achieve 0 prep cost as well as Avatar's Favour later in the games life and people still didnt want the avatars kept out - except Diabolos in Dynamis. It wasn't the mp that was the problem.