I think it's pretty clear that the entire dev process was about creating a game that spoke to the traditional Star Wars mythos and environments. Trying to reinvent everything to be "brand new" and significantly altered in look and feel from the original trilogy and the prequels would just be a recipe for disaster.
Instead, playing to the traditional Star Wars themes leverages the entire Star Wars fan base around the world. You immediately tap a much larger market of fans (and consumers, and hopefully subscribers), and satisfy the needs of the players who want to either go the troop/smuggler route or the Jedi/Sith route, while still remaining in the general canon of the stories.
The former glorious Republic was referenced in Star Wars. The stories that would come later, such as the Jacen/Jaina Solo storylines and so forth that would come after Return of the Jedi, were not mentioned. Seems a no-brainer that you'd go back to the peak time of the galaxy at the moment when it had two significant factions pitted against each other in a balanced arrangement, when there were numerous Jedi and Sith, as well as Republic and Imperial players.
As to the clothing, if you go back and watch the movies, most of the clothing outside of Jedi/Sith robes and royal costuming was fairly skin-tight. Think Han Solo's outfit in Episode 4, Luke's pants and boots outside of his baggy tunic, Leia's outfit on Hoth, the Hoth rebel troops (even with cold-weather gear, they were still pretty tight-fitting), and so forth.
And for the Jedi and Sith characters as well as others, even my Trooper had access to flowing garments that he could wear, along with the cape type chest pieces and even robes for the leg areas.
And finally, as to the "stylized" nature of the graphics, I'm just fine with it. It's clear they made an effort to keep the demands on the PCs low so that they could tap a larger audience of players. By contrast, you can take a look at what happened to Entropia Universe, when they moved from their older game engine and upgraded to CryEngine 2. It seems a large portion of the game population were essentially blocked out of the game, and many never returned. The graphics are beautiful, and the game base suffered as a result.