My take is slightly different: I believe they were afraid to fail.
Given what little we do know about the endless delays -- that they switched the basic engine from Quake II to Unreal to Unreal Tournament to Quake III to one being built solely in-house, and had to restart level work every time, I believe that this was driven by the fear that the game would be a failure. Duke 3D was a smash it. It put them on the map. And they promised to themselves and their fans that DNF would be even better. So, they couldn't stand the thought of it possibly being a flop; it had to be a #1 bestseller, and every game reviewer had to be able to rant and rave at how much more amazing it was over D3D or any other FPS for that matter. And every year that passed, and every time they got more and more ridiculed at its "vaporware" status, it hardened their resolve that the game must not be a failure, or even mediocre, under any circumstance whatsoever. And that mentality paralyzed them, and caused them to essentially re-write and re-write the game, until the weight of it all finally caused them to collapse