I don't know the whole story. Perhaps somebody who knows can chime in. But my impression is that Android being stuck basically on pre-Java 8 at the time while Scala relying heavily on Java 8 features was one complication. Scala generating a bunch of class files for lambdas and so on with no SAM types + invokedynamic to reduce all that plus strange DEX limitations might have caused issues. Plus memory limitations like you said.

I'm not sure there are any real blockers for Scala on Android anymore. I imagine it's mostly a resource problem now. With Kotlin's momentum in that space though, I'm not sure too many people are calling for it anymore. Who knows though, maybe after Scala 3 is finally out the door priorities could shift.