Well, LFR modules will be in continuity for LFR, just as LG modules were in continuity for LG.
I wasn't playing at the beginning of LG, but I'm pretty sure that the initial idea was the same: Greyhawk would be the core 3e world, and Living Greyhawk would form part of the meta-plot. If I'm right in that, it had been dropped before I started playing at the end of year four.
The problems of making a large campaign with players expecting multiple scenario releases per month (the plan for LFR at the start was two scenarios a week!) is that you can't afford delays, and the more hoops something had to travel through, the more delays there are. Even in later years of LG, scenarios got held up at the Circle (boss-administrator) review stage, and Core scenarios then had another hoop to jump through at WotC, or perhaps two. Adding the WotC story team into this mix must have been a nightmare for the administrators, and I'm glad they're dropping it.
Besides, it might keep LFR safe from the Abyssal Plague, even if the (real) Realms suffers another RSE!