This is 100% what I believe is what happened. And see, I expected gamers to learn from the FFXV situation and to NOT rush games out and let the developers properly finish the game properly true to their vision and all, but everywhere on social media I saw memes about KH3 delays and whatnot. People were being super impatient and nasty in the Kingdom Hearts Instagram comment section about the release date when it was changed, and even from before we had a release date. You can't win.
People are doing the same thing for the FF7 Remake, but I think Square learned their lesson, because notice how quiet they've been in terms of the remake from the last trailer up to now. Nomura acknowledged that the game was announced too early, and that's why I think these reactions happen, because nobody's watching a trailer for a new game knowing that it's gonna be five years until you get to play it. Let's not even get started on Versus XIII.
I think the best thing they've ever done was switch over to Unreal Engine 4. The game looks gorgeous, the progress seemed to speed right along after they made the switch, and everything seems to be running fine. Also, something to remember as well, Nomura said in the past that KH3 was so big that they couldn't fit everything on the disc, so some things will have to be released as DLC. 0.2 actually was supposed to be in KH3 as well, if memory serves, but it was much too big and had to be a separate game.
I'm guessing that when they made the switch, some things just couldn't be carried over in time (which is natural, because that's a YEAR gone), so they had to cut their losses and focus on delivering a completed product. And I think they accomplished that, you can complete KH3 and not feel like there's a huge gaping narrative hole like you could say with Vanilla FFXV. I think they really did run out of disc space and are planning to release a lot of stuff later on, I don't think they're going to release KH3 in the early part of the year and leave it alone. I think there'll be consistent updates, but Nomura's focus is going to be on FF7R from here on.