The only reason they did that was to get around to more violence and make this Shredder more genocidal.[/quote
So they decided to make the 2002 Shredder into another Krang basically which was so dumb. The problem with making Shredder a psycho badass and then revealing him to be a 1 foot alien blob is that it cheapened the character. At least when they had the Demon Shredder who was a much bigger threat than the Utrom Shredder, him you could take seriously.
With the Demon Shredder you had a badass human ninja warrior with the powers of a god that was scary as hell. With the Utrom Shredder, all you had to do was step on him and that would be the end of his story.