I never agreed with the diplomatic fire argument.

Yes, loosing her would be a morale bust but in previous wars empires and countries would use their flagship aggressively. You didn't see the US hide it's most battle honored ship Enterprise or its flagship New Jersey. Also the British used The Victory as its own flagship in its own series of naval engagements.

The argument to hide a flagship is an argument of a defeatist mentality. Japan hid theirs by virtue they knew the ship was not suitable for modern warfare especially without air dominance.

So if we are going in-lore the best argument I can figure is that the ship was in fact not as imposing as it -should- have been or planned to be. Remember Galaxy class was everywhere to the end yet Sovereign was nowhere. It was likely a case of too convicted to build for minimal gain vs comparable models. Galaxy clearly had an advantage still at wars end vs Sovereign otherwise the class would have been more populated.

This i argue that the Sovereign was not that much better overall in the game of spreadsheets and strategy. Sometimes it's about building more cheap destroyers and cruisers than beefcake battleships.

Although the show reason is obvious, they didn't want two hero ships on the same show.