Raising the game's rating to M wouldn't change anything. Look at how many kids play games like Call of Duty.
But assuming it did work, it would cause SE to lose sales because parents wouldn't be buying it as a distraction for their kids.
I think it was also an issue for their shareholders or something. I recall one live letter where Yoshi P was talking about mods and where they were on the brink of having to raise the game's rating because of user-made content, and if that were to happen, that's when SE would start exploring putting a stop to those mods. SE doesn't want to increase the age rating because it would hurt their marketing.