All speculation, but work with me here.
MGHS replaced Fantasy, a Merrill Heatter Production. Peter leaves that show/it gets canceled, then hosts 1/2 of its direct replacement, also a Merrill Heatter Production at one point, but now isn't. I wouldn't be surprised if NBC simply thought that was too much of a headache, even if Peter was ready. I suppose Peter could've left Leslie Uggams to host the final few weeks solo?
Bowzer was not a bad host, but I don't think too many hosts would've been able to fill such big shoes, considering HS was only off the air for two years, after running for 15. He was entering the fire wearing a kerosene suit regardless.