My own musing, made entirely from my own deranged fever dreams, but...I think people found hybrids too expensive for the impulse. If you needed big GO!, you would pay the price and jump through the hoops to get govt. approval and NAR/Tripoly certification. With hybrids, from the smallest engine to the largest required a lot of hardware, PLUS electronic ejection of some sort. The only advantage I can see over solids is that you can get a long duration, low impusle burn, impossible with solids due to heat. I like hybrids (can't afford one though): I *like* gizmos and gadgets and hardware. Hybrids are the closest thing I could ever get to a "real" liquid-fueled rocket.
At least for the larger motors, hybrids are significantly less expensive. I can fly a Hypertek hybrid M for $180 versus at least $300 for a solid M. The Hypertek M is close to a full M in impulse. It does have a lower initial thrust than a solid M, but that just means don't build a heavy tank of a rocket.
Many times the club will buy the equipment to fly hybrids. The club I fly with has the equipment to fly every size of Hypertek hybrids all the way to M size.
Hybrids got popular for a while after the Aerotech fire and BATFE crackdown. Hardly anyone seems to be flying them now since there is a huge selection of solids and the BATFE is no longer an issue.