I agree that Louise and James - and their wishes - have been taken into account, as explained elsewhere.
As Nellie says above it's very possible that Edward and Sophie desired this and discussed it with the King. They didn't want their children to have their princely titles and making the title Duke of Edinburgh non-hereditary may be part of what they wanted for their children.
By not creating Edward an hereditary Duke, as the original agreement would have assumed. As was noted above, the agreement seems to have been intended to allow the late Duke an opportunity to found an agnatic, Ducal house.
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