"Knowing that Walter eventually got to the U.S. prior to WWII and pretty much stayed here thereafter, my speculative guess is that out of respect to the art of the man who was responsible for helping make him famous as he had become in the world's opera houses and concert halls, Walter likely became very sensitive to how people in the U.S. perceived M8's performance requirements. When it became rather evident on this side of the Atlantic with everyone seemingly taking to heart that it was a "Barnum and Bailey show" which stuck ever since its first performance, Walter quite possibly believed that, and didn't want to perform it as a spectacle in the vulgar sense of the word. And not knowing for sure how Walter felt later on about Stokowski's highly-publicized first performance of the work in America in 1916, it's possible that Walter disliked Stokowski's motives in wanting to perform the work"
Maybe. That's a little thin, but I can't come up with a better answer. Maybe Walter was just jealous. Let's start from the top.
"When it became rather evident on this side of the Atlantic with everyone seemingly taking to heart that it was a 'Barnum and Bailey show' "
Who? Who's "everyone" and why did it matter what they thought? More to the point, what's wrong with M8 being thought of as a B&B Show? Mahler himself performed it with close to a thousand people.
" it's possible that Walter disliked Stokowski's motives in wanting to perform the work"
Huh? What motives? Stoki performed it with a thousand people - jut like Mahler - in Philly and Carnegie Hall. People came; everyone liked it; it made money; everyone went home happy, so where's the problem?
My point is simply that if Walter had some problem with that, then it was HIS problem. I can't see where Stokowski did anything evil or devious.
I would guess that another possibility is that Walter simply stopped believing in the work. Look at all the times he did Mahler 4 in post-war Vienna. I'm sure if he had said, "for old times sake, let's get over the war by doing a performance of Mahler 8 instead", I'm sure the Vienna Phil. would have gladly cooperated. Just a thought.
