They haven't watered down anything, the Focus RS was always FWD. The advancements made with Revoknuckle will make people stop wondering if they should have gone 4wd. not to mention that 4wd would have been too expensive and weighed too much.
The RS still has a chance to come over, since Ford is reevaluating a more expensive sport compact since the market has swung that way.
5 years ago when the last SVT Focus came out the range topping one cost around 20k. Now you can option out a GTI or Mazdaspeed3 to be close to 30k. Even with inflation that is still a large price increase, and now with STIs and Evos pushing 40k there is much more wiggle room for a 25-30k sport compact to come into the scene.
Also, cobrafreak, what does the environment have to do with this, not all people want a car that can only go fast in a straight line.