I do remember thinking the idea of a "4th network" (especially after having seen others try and fail, e.g. DuMont) was ridiculous at the time. Oh, if only I'd been more prescient about entertainment options of the future!
It wasn't rediculous. Paramount apparently couldn't figure out how to make it financially feasible and get stations to pick up all the hours of programming they wanted to do.
Then Star Wars became a runaway hit and they figured a Star Trek film would be the thing to do.
No, Phase II only came into being AFTER Planet of Titans was cancelled, AFTER SW came out and hit huge (they figured they'd been beaten to the punch and gave up in favor of tv.) It wasn't till a few months later that it switched back to being a new feature release.
There were other modest fourth network bits around that time; if you look up operation primetime you'll probably see something about it, combining made for tv movies and miniseries. It was a pseudo network consisting of unaffiliated locals (the very stations that made TOS huge in syndication.)
I don't think there was a huge risk with PII ... there just wasn't the smarts (or the serious inclination) to push it through. Dangling the TOS syndication numbers at prospective stations would have been mighty enticing, plus demand for the product had only just peaked in 76 or so.
EDIT ADDON: something else to consider: if Lew Grade could get a second season for 1999 at its price (I remember 275,000 per hour, figuring that is dollars not pounds) just a year or two before, SOMEbody would have funded a half-season or more of TOS.