Their unwillingness ot use the costume never really had anything to do with Welling's fear of being typecast but everything to do with the legal issue surrounding the Superboy character, and to a lesser extent Superman.
As it stands, Time Warner can legally claim that the character of Clark Kent in Smallville is not in any way related to the characters of Superman and Superboy but is, in fact, a completely different independent creation who happens to have the same name and similar powers. But the second Clark puts on the costume or someone calls him Superman or Superboy, then they owe Jerry Siegel's estate a shitpot load of money. Superman Returns, they could stand the royalty hit because the movie wouldn't have worked without the name and the costume. For Smallville, not so much. In fact, during the production of Smallville Time Warner lost the rights to Superboy altogether. If they had let him wear the costume, then they'd be forced to give all of the revenues that they earned from the series to Siegel's estate. All of it. Because they didn't have the right to use the character.
Time Warner won their last appeal, but that just means retrial. It's a very messy thing going on right now.
In 2033, however, it becomes much less messy. In 2033 Superman and Superboy both enter into the public domain. At that point anyone can use the characters for anything. And Time Warner will have little choice but to make a series with the character wearing the suit, because if they don't someone else will.