It seems to make sense: the interpreter already stores list structure to interpret, there's no space in RAM for a redundant second representation, and going to external storage for the text would practically force batch mode when the store is paper tape or punch cards. That's similar to 70s/80s home computers keeping BASIC code in RAM in tokenized form, except there you had to type a line over again to edit it.

(But on larger machines in the 70s I get the impression Interlisp stayed with structure-editing for its advantages, not just inertia. It was killed off by Common Lisp which owed more to the east-coast Lispers who gave us Emacs.)