The "reason" was simple greed. The same thing applies to nearly EVERY accessory for the 360. Hard drives, memory cards, headsets - all have to be Microsoft's proprietary crap instead of standard hardware that you can buy anywhere.
I also wouldn't recommend doing the modded hard drive route.
Just a fair warning from someone who helped shape some of the policy documentation for this scenario...
Personally I hope the PS3 route is taken for hard drives next time around. I can understand the reasons why they haven't yet, but hope they do next time around.