Why did they need to change these characters? And why did they do such a horrible job of it?

It's all down to the legal fallout they've had with former artist/writer Ken Penders who has laid claim to everything he worked on at Archie, which entails about 50% of existing cast.
Therefore they've had to write a plot pretty much rewriting the universe around the comic and it's characters, one that will see it more in-line with the games. Hence the cast receiving complete makeovers.

But the main characters aren't affected by him. And what's more is, Flynn has tried calling them "niche". And he wonders why no one takes him seriously.

Actually, a lot of main characters are, especially those that were involved in the arc that were running before 'Worlds Collide' hit. Elias, Alicia, Geoffrey, Drago, Hershey, Dr. Quack, Jules and Bernie Hedgehog, Fiona Fox, and many many many more all belong to Ken Penders and as such have been pulled from the comic leaving massive gaping holes in cast and plot.
This is why this "recreating of the world" using the Genesis Wave has been brought about, to re-write the universe to make up for all these changes. Bare in mind that it's been made well known that as of late SEGA have been getting very hands on heavy with the writers, probably trying to avoid another incident like with Penders.

I never thought some of those characters were Penders' (namely Fiona and Geoffrey since they were much older creations). But I meant the core SatAM characters.

She looks excellent in your style hun! :D even more cute ^^ hope you can colour these at some point or something hehe.

Nice pic!