Disney University - Taran

There is now hearsay that a Live Action Black Cauldron is in the works. >_>

I don't know when you were born or if you are from a near similar generation as I was, but the 80's were a different time. Kid related content was highly monitored and censored, and many things avoided striking fear into kids, especially with cartoons during these times.

See, the problem with your VHS reasoning, The Black Cauldron was released in July, 1985. The Little Mermaid was released November, 1989 (VHS release May, 1990). And then followed by Beauty and the Beast in November, 1991 (VHS release October, 1992). Then Aladdin in November, 1992 (VHS release October, 1993). As you can see, the following moves, starting 4 years after the Black Cauldron's initial release to theaters, received a VHS release ranging from 6-months to about 1-year after their theatrical release.
Disney had plenty of years to release a VHS of the Black Cauldron, but they never did until August 4, 1998, 13-years after the film had vanished from most people's knowledge.

All I remember back in 1985, I saw the previews for the film, and I was excited to see it. Even as a 5-year old, I loved scary movies. I begged my dad to take me. He wanted to wait for the week after its release to avoid crowds, so I was patient. When we went to the theaters the next week, the movie was gone. Pulled from the theater because it was dubbed "too scary", and never seen again until I was 18.
See, the reason it did poorly is because parents refused to take their children to see it because it was "too scary". Its not because the content, plot, or animation was bad, it was scary. And for parents back in the 80's, that was unacceptable. This was also reflected in reviews by critics who also deemed it inappropriate for children, and thus caused Disney to pull it from theaters and denied its re-release in any format.
Thus, the  film was banned. By definition; a ban is "officially or legally prohibit" which is what Disney did, piratically denying its existence in the Disney Library until fans started requesting its release in the late 90's (thanks to the internet). While it is still not considered a popular favorite for most families, for the few who do know and like this film for its own unique Disney Qualities, it is a rare gem to keep.