It's not like Kato is God so, could it be possible that it was he who scrapped the Chrono Break project? It's a secret to no one that Chrono Cross was kinda hard to make for him and his team. The results were the relatively awkward presentation of the story, the presence of evil plot dumps, and the removal of entire parts of the originally planned scenario (the identity of Magus as Guile, the involvement of Janus, the role of the Terra Tower statue, the real purpose of the Arbiter of Time for Lavos' ultimate evolution, etc.)... so, perhaps Kato actually cornered himself in a deadend... and don't know how to explain the Fall of Guardia as he originally wanted?