Nah, no conspiracy. The CGI was tied to Netter Digital. That old dude Netter was half of what made Babylon 5 get to air and get 5 seasons. He handled the production side of things, making all the deals, setting up the CGI production. Didn't Netter Digital fold? The assets might have been liquidated or deleted if it was tied to an affiliate's computers (Foundation Imaging? I'm a bit hazy on that side of B5's production). And Warner Bros didn't seem to value it, so they didn't try to archive the models. Sometimes it is just an issue of space. Look at Square of the video game world. Final Fantasy VII was their best-selling game & their 2nd most profitable game, yet they refuse to remake it. Rampant word is the real reason is they deleted all the code for the game and would have to not just remake the graphics, but reprogram the entire game from scratch, in addition to the logistical scale of trying to do the game justice (it's a whole world, a world map, several towns and dungeons. Games since, take FFXIII, are linear tunnels with not much 'world in them'). TV/video game companies treated their data early on in this CGI era like comic books were treated back before the '80s (and '70s to lesser extent), something disposable... but worse. At least Marvel, DC, et al, have archives of everything they put out. With B5 & many video game companies, they're effectively destroying the equivalent of the master copies, plates, etc.
I do know why B5 looks so bad in the new screen size ratio is the CGI was rendered in the old size ratio and without the models, it did not handle the conversion that well. B5 was very advanced for its time in terms of extensive CGI, but the downside was they didn't do it in a way that could easily be adjusted (see Star Trek, which went full CGI in the mid-late '90s).