Because Toon Lagoon has way more space for shops and restaurants which, in case you haven't noticed, tends to be Universal's obsession lately. KidZone is a tiny area - basically the size of Diagon Alley minus the ride building and the London waterfront, which means very few attractions or very few shops. A multi-character free-for-all in that tiny space will not do the IP justice. If Universal sees the excitement this announcement has created, they will certainly start blue-skying ALL possible ideas: replacing KidZone, retheming Toon Lagoon, replacing the Lost Continent, replacing San Francisco, filling the empty lot between The Simpsons and MIB, third gate land, etc. Of course, Universal could still be going after The Hobbit for its Toon Lagoon replacement, but that doesn't mean Universal Creative isn't currently working on ideas for ALL of the soon-to-change areas. (Personally, I wish they'd just retheme Toon Lagoon to Bikini Bottom, which may not make tons of people happy but the recent movie did remarkably well and the series is routinely one of the top shows on cable. IN RERUNS. Besides, it's all water rides, and SpongeBob lives in the water. And I want to eat at the Krusty Krab!)
I hope they have GREAT ideas for KidZone because there will be MANY problems to overcome shoving Nintendo into this area. There are so many things Universal MUST do back here, or the whole thing will be a bust: