They should have. Legend of Korra's depiction of the world and its very plot is so radically at odds with TLA that I suspect it started out as a new IP about some vigilante in a WW2 Era setting.
This gets understated too much, but the ideal Avatar in TLA was more of an Oriental spiritual teacher figure ala Krishna and Confucius and the Buddha. These figures aren't redeemers or rulers of men like Christ since men don't have Original Sin, they aren't "broken" or "corrupt" by nature. LoK depicted the Avatar as more or less a spirit dictator/vigilante who cannot be questioned. LoK went with a theme of men being horrid meat eating beasts who need the Avatar/Korra as a strongman to keep them in line and usher in a world of social justice.
There's no point to make a Korra sequel since they just turned the Avatar World into a pozzed fantasy of modern day West here on Earth. What, are we going to have the Earth Avatar fight microaggressions and enforce safe spaces for spirits? The only way to salvage the franchise if we can't just ignore Korra is to have some offscreen apocalypse turn the world into Hokuto no Ken.