Part of the issue was that they were borrowing heavily from the Ultimate Universe for some of the way they represented characters and aesthetics for the movies. In the beginning of the UX-Men run, Jean was sent to a mental institution prior to being found by Xavier. That allowed them to think "oh what if the Phoenix was a mental thing vs a cosmic thing" and given the direction they were already going, adding a space element to an already convoluted multi-story plot for The Last Stand was not going to work.
As I recall, there was no controversy whatsoever regarding OP’s original question
“Generally, one knows me before hating me” -Quicksilver
Well, Jean's mental instability/descent into madness was definitely handled better in that film than it was in X3. Even clinical psychologists said so.