Bedrockgames
I post in the voice of Christopher Walken
Just to go back to the OP for a second - why can't WOTC go back to 3.5, ask yourself this - Why didn't Paizo?
If 3.5 was still viable as a vehicle for profit, why would Paizo, a pretty savvy bunch of businesspeople, take the risk of developing a new system?
I have no idea how much Pathfinder cost to bring to market, but, it is my opinion that it can be summed up as the mathematically exacting term of <i>a lot</i>. Now, if 3.5 was still perfectly fine, as is being suggested in the OP, then why bother? Why spend all that money on something that very well might not work when there is a perfectly viable option right there to be used?
After all, 3.5 is OGL, and it's already been shown that you can repackage the Players Handbook and sell it. Why wouldn't Paizo save themselves a WHOLE lot of hassle, reissue the Core 3 with new art and new flavour text and be done with it?
Unless, of course, 3.5 was largely played out and there truly did need to be something new in order to get people buying again.
So, in answer to the question, "What's stopping WOTC from going back to 3.5?", I'd simply point to Paizo and say, "Well, if it was a viable option, why didn't they do it?"
I think there are a few possible answers. First there were some legitimate mechanical concerns with 3E (and the game had been pushed a little too far by many of the splats on top of that). This bothered some, and didn't bother others. But clearly there was a demand for some more balance in the system. Paizo was answering this demand.
Another key reason, IMO, is Paizo wanted to set up something distinct enough that their control of the Pathfinder log and license would matter. If they just remade 3E, then all they would be doing is putting out the old SRD document and arguable they wouldn't have much of an IP claim to their own line.
Personally I think Pathfinder is a bit different than 3E, but not by a whole lot. It still looks and feels like the same game to me (it is even less different from 3E than 2E was for 1E IMO).
Effectively Pathfinder has repackaged and sold 3E. It is more like a 3.75. And they have made it very profitable. The key thing for me is they eliminated a lot of the junk that came with the splat books and refocused the game on flavor and putting out great adventures (something I had been calling for all through 3E). They balanced it out a bit, but I think on the whole most fans of 3E aren't as obsessed with the balance issue (personally I wanted a touch more balance in 3E than it had, but the balance in 4E just goes way too far for my tastes---I think there is a fine line between balance and making choices matter).