The only explanation for not using this approach is a plain ignorance. Majority of people have no understanding of compilers at all. And yet they are writing compilers. In C or Haskell.
And, btw., teams that cannot learn a tiny DSL in an hour (or write this DSL in a week) should not be allowed to write compilers. It's kinda obvious.
That includes people like Lars Bak, Martin Odersky, Anders Hejlsberg, Simon Peyton Jones, etc? I wonder where the burden of proof should be placed in these kind of arrogant arguments -- as if "compile-time metaprogramming" is some magic bullet for compiler design...
As for the rest - yes, compiler construction is not their main research topic. They can all be great language designers, but their approach to compiler construction is needlessly overcomplicated.
A view of a compiler as a chain of stupidly trivial passes, ideally expressed as term rewriting, is not very common among the researchers, but so far it yields the best results.
Actually Lars Bark and team are not "language designers". Smalltalk (Strongtalk), Java (Hotspot), Javascript (V8), all have been designed as languages by other people.
They are world reknowed experts in compiler design.
Or maybe technical superiority is a more varied thing than what you consider (merely a language's features and "expression" capabilities), and includes tooling, portability, speed, direct access to hardware, existing codebase to work upon and lots of other parameters, for which C was king or very near the top for many decades...
>In order to avoid unnecessary flame war: I give no crap to any popularity based arguments.
And from my side: I don't give a crap for "technical arguments" that focus only on a very narrow area of technical benefits ignoring lots of others.
Even "familiarity of the team with a language" is a technical argument (in the sense that it speaks to the capability of a teams to practically use something).
I also don't think that "popularity" is just fluff. It might not be a 100% solid proof, but it does point to real, battle proven, results (as oposed to vapour-ware and hand-waving about superiority).
In the end, history and actual results are the only criteria. That's being pragmatic and empiricist -- as opposed to mere beliefs that don't pan out in practice.