Probably my second hypothesis is the correct one, given how forgotten almost all the DB original characters get. There seems to be no place in this story for Yamcha, Poal, Oolong, Master Kame and Bulma (except, in her case, as the sudden love interest of the regenerated villain). Kurilin exists only as the tag-along sidekick, and Tenshinhan and Chaos are there only for the villain mop the floor with them to show how strong he is. Piccolo is a demon in DB (vulnerable to spiritual prisons and all), then is suddenly an alien in DBZ. All the fun is scraped, except for some few scenes between the fights. The characters' variety of powers is taken away, giving its place to ever-growing energy rays. Even the titular Dragon Balls are almost forgotten from the Cell arc on.
All in all, this looks a lot like Mr. Toriyama was putting his old characters in a story which wasn't planned to feature them.