The Jedi purge. You know, not too long (relatively speaking) before episode IV.
Because it might have been very expensive and there were very few jedi around?
Well, a lightsaber doing only a little more damage than your average plain longsword is indeed a bit strange.
agreed.
As for the lightsabre thing....
Keep 2 things in mind
1) It WAS 4000 years prior to Episode 1... tech improves, so it makes sense Lightsabres wouldn't be as good.
2) The ability to damage comes from the user, not the weapon. All the weapon is is a glorified longsword... it's the forceusers ability to use the force that makes it so deadly.