Not to defend them at all, but the longer it took to plan HL3, the longer it became a sounder business decision to just not do it for risk of not living up to the hype.
But Black Mesa is a counterexample; they still haven't released Xen last time I checked, but everything they have released far exceeds expectations. Maybe Valve should pay that group to finish the HL series.
Depends on how much you have to lose. Valve has a lot, and what they could win is a drop in the ocean next to "the steam tax". The icing on the cake is that there is value for them in competing less with those who publish on steam.
But Black Mesa is a counterexample; they still haven't released Xen last time I checked, but everything they have released far exceeds expectations. Maybe Valve should pay that group to finish the HL series.