Namespaces are annoying but at least let you reorganize or fix mistakes. If you want to prevent squatting, rate limiting creation and deletion or using a quarantine window is more practical. No recovery path just rewards trolls and messes with anyone whose processes aren't perfect.
Not to mention the ergonomics would suck - suddenly your terraform destroy/apply loop breaks if there’s a bucket involved
a) AWS will need to maintain a database of all historical bucket names to know what to disallow. This is hard per region and even harder globally. Its easier to know what is currently in use rather know what has been used historically.
b) Even if they maintained a database of all historically used bucket names, then the latency to query if something exists in it may be large enough to be annoying during bucket creation process. Knowing AWS, they'll charge you for every 1000 requests for "checking if bucket name exists" :p
c) AWS builds many of its own services on S3 (as indicated in the article) and I can imagine there may be many of their internal services that just rely on existing behaviour i.e. allowing for re-creating the same bucket name.
As for c), I assume it's not just AWS relying on this behaviour. https://xkcd.com/1172/
I think that's an important defense that AWS should implement for existing buckets, to complement account scoped bucket.