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Most long-running series don't take hiatuses. There are a few that do, one of the most recent examples would be Fairy Tail, but I don't think it's too common. Aside from cases where they've had to take a week or two off for holidays or sports, they're usually trying to get episodes out every week.
As for the question at hand, I think that the series was just too successful after the Indigo League for them to consider just taking a break. The fact that the anime was originally suppose to end at that point might have also made them not want to take a break if they were going to keep going. They also were able to use that time to showcase a few more second generation Pokemon to hype up the new games. Technically though, they didn't start making each series last from a generation's start to its finish until AG. The original series consisted of both the first and second generations. Still, I think that the reasons they do that is so that they can promote the generation's games for years, as well as provide more hype for the next generations by showcasing new Pokemon in both the shows and movies. That's probably more appealing to the marketing team to extend a journey for years rather than rushing through it in over a year like with the first season, especially when we can get more games in a generation now due to both remakes and sequels being possibilities.
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