There is an all-too-tragic human quality of sitting stoically while things you don't like happen around you, because you want to be a get-along person or conserve social capital or are just shy or proud or whatever, and then walking away when they become unbearable. If you ask someone why he left a job, it's often because the hours were too grueling, or a supervisor was treating him disrespectfully, or the tasks he was working on didn't engage his passions. But then if you ask, "Did you ever ask management to reduce your hours, let alone insist upon it? Did you ever ask to be switched onto a different task, let alone insist upon it? Etc.," the answer is usually no, what would've been the point, etc. But most of the time management would rather keep around solid people and probably would make an accommodation. These days such accommodations seem to abound in every industry. It's just that it's easier not to ask, and eventually it's more gratifying just to leave. "It should've been obvious I hated the hours -- who wouldn't? -- and they could tell I was miserable. Sorry for trusting them to do the right thing." (My sense is that this happens a lot in non-professional relationships, e.g., romantic ones, too.)
The positive spin on this is that people want to be heroes, pillars of the community (i.e., those who bear the burden of the community to hold it upright), good friends, good soldiers, etc., etc., and so they sacrifice and sacrifice until they run out of offerings, emptying their vast aquifers so everyone else can have green lawns. The negative spin is that it's easier not to assert yourself when you're unhappy because then you're purely a victim ("I left because my boss never gave me good opportunities" vs. "I left because I couldn't find a way to make the work satisfying"). "Tell me what you want to be happy" is a terrifying question because if you get what you ask for and still aren't happy, it's your own damn fault. "You should know, if you really care about me!" is an invulnerable defense, but it's kind of like Vhailor's empty armor.
I don't know if that's what happened here, but it sort of sounds like it to me. Maybe I'm naive but I just think that Avellone was such a great writer, such a famous designer, one of the few widely known celebrities in the genre, and a founder of the company -- such a persuasive advocate (if you listen to him preach in these presentations) and such a mensch that he must've had the power to get results if he said, "Guys, I'm not comfortable working here if we keep making nepotistic hires. I know these are your friends and family, but I really have to put my foot down." Or, "I really want to do more than one project with the same partners, I feel like we're not developing lasting relationships here."
I dunno. Maybe Obsidian really had intractable problems, maybe they were indifferent to the golden goose, but it's just sad to see bad blood between folks who made so many great games. I'm glad that Chris is happier with the current arrangements he's got, though. Unlike others in this thread, I think he's continuing to make big contributions, in no small part by incubating other writers he's mentoring at all these companies. I would of course like another PS:T or KOTOR2, but MOTB, for instance, seems an example of how he can help support great games without having to be at the center of them. So maybe we'll get more great games in the long run from this consigliere version instead of the workhorse writer.