The UI issues changed a lot between the DOS and Windows environments. Because there was a need to maintain the keystroke compatibility (partly necessary because of the way that some macro stuff worked) that compatibility became the focus instead of making a great windows UI. Of course with a huge installed base, it wasn't a tough decision to go in that direction.
Yes, I was there.
First there was 1-2-3, then R3 (which included an OS2 and IBM mainframe version), and then windows development started from there...but never quite took hold properly. At the same time there were mac, vms, and sun porting/development efforts going.
The windows transition was a problem for pretty much all Lotus products, nor just 1-2-3. Magellan was great for DOS...but file manager obsoleted it. Manuscript was great in DOS...but Lotus ended up buying AmiPro as a Windows offering rather than rewriting Manuscript. That move was an early form of the 'buy and rebrand' approach that IBM has perpetuated, not the least of which was buying Lotus as a whole. It's far easier to buy a good fledgeling product and rebrand it than it is to develop something from the ground up and make it great. At least that's the prevailing thinking anyway. Remember that Notes was not developed by IBM...or even Lotus...it was created by Iris. Lotus controlled Iris, IBM bought Lotus, Iris was eventually absorbed and the Notes Server was renamed to Domino.
As far as open sourcing...Agenda has (had?) an amazing data engine for the day, but the UI was horrible, and nobody could figure out a good real-world use for it. That should have been dusted off about 10 years ago and relaunched.
Now IBM isn't even in Cambridge/Boston any more (aside from sales presence) and all remaining dev has been moved to Littleton. The 55 Cambridge Parkway and 1 Rogers Street buildings are long devoid of a Lotus/IBM presence.