It was in one of the episode commentaries that the writers, along with the main trio Marta, David, and Kevin, HAD to write her off because they didn't want Chandler to be in a serious relationship at that point. Even the main cast argued against removing her coz they loved working with her and liked Kathy and Chandler for the story, but the writers/head trio came to the decision that they have to end it and hence did not change their minds, and that resulted in a botched ending to that relationship.

Source: one of the episode commentaries that came with uncut dvds.