This isn’t the first time something like this happened. Persona 5 Strikers got retconned by the extra content in Persona 5 Royal.
As much as I wanted Age of Calamity to be a true prequel to Breath of the Wild, the game would’ve been awfully small. At the very least, it’s technically a sequel to Breath of the Wild, just not THE sequel. They could only do so much with a roster of only 6 or 7 characters when they had the opportunity to bring in the rest of the characters from Breath of the Wild. It would also be predictable, which the same people who really wanted the story to be that way would also be disappointed by it.
I would rather have a complete story that diverges into a different timeline than have a small story that’s part of canon with characters shoehorned in a non-canon manner. A time loop wouldn’t have helped the situation either.
Remember, Age of Calamity still delivered us what Hyrule looked like 100 years before Breath of the Wild. They gave us voices of characters whom we never heard speaking in Breath of the Wild. They implied that Astor was the one who started the Calamity in Breath of the Wild. Even the events of Age of Calamity mirror that of the Breath of the World’s memories in an opposite manner; basically, two sides of the same coin. Be glad that they at least brought in some of the stuff the fans requested.
Besides, having another timeline goes to show how Breath of the Wild is evolving to become its own universe than can be seen independently from the rest of Zelda games.
The two games aren’t really meant to be compared, because they are targeted to basically two different audiences and have two different playstyles.
Quality over quantity. With Age of Calamity bolstering direct collaboration with the Zelda team, it might turn out to be better than the first Hyrule Warriors game, even with less content.
One character in Wave 1, multiple in Wave 2. I honestly don’t mind waiting.