It isn't even necessarily about the workflow. It's difficult to develop gameplay and adapt to a new architecture (and code libraries) at the same time.
The easiest way to do it is to separate the two. But it's hard to justify that use of employee time. By making it a product, there is justification for the work and you can get on with it, and recoup the cost through sales.
This is assuming devs will want to use their old codebase. Some devs throw their old codebase out or just start with a new codebase they purchased (which is what happens when you buy UE3 and go to UE4 for example). But a company like Naughty Dog wants to keep using their codebase. Heck, they've used parts of it since Jak & Daxter.