Your recollection about previous proposals on teachers becoming governors is correct. At that time, however, they included a restriction on teachers standing as parent governors in their own schools and that was the one that many people felt was unreasonable. It was widely argued that parents doing the electing were capable of making sensible choices on the issue of balance. The new arrangements under the School Standards and Framework Act 1998 do not prevent teachers from standing as elected parent governors. The may not (unless they are parents of current pupils) be appointed parent governors (these only arise in hospital schools, in cases where no parents stand for election and in certain circumstances among governors for proposed new schools) but this has always been the case.
The only new restriction is on staff being co-opted onto governing bodies at their own schools. You ask why. I personally think that the avoidance of imbalance could still have been left to the common sense and growing confidence and experience of those on the spot. However I know from letters that there was a serious question of balance in some schools - mostly in deprived areas where perhaps many didn't have the confidence to put themselves forward or complain when things went awry - where at extremes parent, LEA and co-opted governors nearly all owed their livelihood to the school, which wasn't healthy.