First off, they already had all those Empire models. To introduce Araby/Cathay/Nippon/Albion or the like would have taken considerably more resources on their part. Secondly, to build on your idea, I don't think one of these Araby, Cathay, Nippon or Albion factions would sell as well as Empire. Empire already has a pre-established fan base. I'm surprised it took GW so long to bring them in.
Better to have tried and failed than not tried at all. It’s not as if GW were down on their luck in terms of finances. They are the biggest Wargames company in the world, and can afford to take risks. They’ve already done so with Ossiarch and other new factions to mixed reviews, so why don’t they show some guts do the same with a new human faction?
I say they should stop wasting money on nonsense like POP collectibles and Warhammer Advantures and do more to expand the worlds of their games rather than messing with the same old rubbish.
3) Dwarfs = short, fat bearded men who don't ride anything, don't use magic, don't have any monsters. Empire has the schools of magic, griffons, STEAM TANK!, Knights of the White Wolf, Knights Panther, Knights of the Blazing Sun.
Excuse me? Dwarfs have Runesmiths who forge magical runes to dispel magic and use it to develop killer weapons and solid armour.
They build all sorts of inventions from helicopters and airships to organ guns and flamethrowing cannons, and they also use runes to make these more reliable than and generally superior to any ramshackle contraptions the men of the Empire can make (including the Steam Tank, which is no match lorewise for the Kharadron airships for example).
The fact that the Fantasy Dwarfs don’t ride anything makes sense in lore (short legs), and if we’re counting the AoS Dwarf factions as well (as you are in your first point), then Dwarfs do ride something and do have monsters (Magmadroths), so already your point is invalid.
Empire Knightly Orders are just bog-standard 15th Century Knights with different liveries, nothing special there except the Orders themselves are different from anything existing in 15th Century Europe.
Griffons are also used by the High Elves (and any faction can take them in Storm of Magic), and their cousins the Hippogryphs are ridden by the Bretonnians. Again, nothing unique there.
The schools of magic may dabble in a bit of everything, but they use only the 8 standard lores, which High Elves and Slann are much better at using anyway, and haven’t developed any unique magic of their own.