My understanding of the situation is amazingly simple. And if I'm right, this decision makes a LOT of sense.
1. nVidia driver team is *very* busy ATM. They're trying to optimize the NV30, to work on NV34 software shader routines and to optimize NV31 because it's going to be announced soon. Thus, if they can gain time by not worrying too much about 3DMark 2003 optimizations, they might actually get the other things done in time.
2. nVidia expects ATI to have put a lot of time on optimizing their 3DMark 2003 score. They'd be delighted if they could have made them lose their time.
3. 3DMark 2003 use few *different* shader programs. The NV30 is actually faster than the R300 when a lot of shader programs are used, because they're stored in video memory. So they obviously don't like that.
4. 3DMark 2003 uses VS2.0. and PS2.0., but *all* of those shaders are executed in one pass on the R300 AFAIK. That means nVidia isn't getting any advantage from their huge NV30 PS/VS flexibility. That sure doesn't make them happy...
Personally, I really don't think nVidia even cares to the slightest degree about PS1.4.
nVidia doesn't care about the NV2x anymore. What they want, now, is a huge NV3x line-up: everything from $99 to $499 will soon be NV3x. So that's really not their problem...