The reputation as a mean benchmark that made the first game popular among a certain crowd of computer savvy tech-heads, (i.e. pirates, according to Mark Rein, lol) cost them a lot of money among the crowd of people who would have just wanted to play the damn thing but were worried it wouldn't run (or had PCs it actually didn't run on). Turns out that while in internet forums the tech-head crowd is more prevalent, it isn't on the market.
So whatever you think of this assessment of the situation with the first game, it's the assessment Crytek made, apparently, and I'm betting that Crysis 2 would have been a step down from the benchmark-of-all-benchmarks towards the well-optimized-game-for-everyone, even if the consoles weren't an issue at all.
Blaming them for that, i.e. not trying to learn from their mistakes as they perceived them, is even sillier imo.
Although, obviously, along with that plan came the idea to get the consoles on board too, because, well, might as well, if you're gonna step down from being the big boy on the block on the PC market anyway and that's in all likelihood the reason why it was scaled back that far. I mean, DX9 only is low for a successor to Crysis 2.
So yeah, obviously consolization. The whole focus of the engine is on console compatibility. But it didn't come out of the blue.