*Puts on her tin foil hat* This is simply a probability but if rumours are to be believed, this does make sense.
Titan was rumoured to be a cross between a FPS and an MMO game. Blizzard did confirm it to be a brand new IP. What I and most out there believe was that Destiny was "titan" the game Blizzard had been working on.
However, what happened here was ActiVision probably brought in Bungie to redesign/design the game and take on the creative lead and production of the game.
Now Destiny seems like a massive undertaking. Would probably go down as the biggest investment in any game yet from what we've seen so far. Blizzard obviously doesn't have any experience in the FPS genre. ActiVision probably felt it was in their best interests to have a studio with more experience in that particular genre - I mean Halo was massive and hugely popular. It helped redefine a generation of FPS games.
So Bungie was called in to lead the development process and take over.
The second scenario seems more probable. I feel is that if Destiny and "Project Titan" were two different IPs, but from past rumous like I said "titan" was suppose to be a Sci-Fi FPS MMO, these two projects were two similar to each other and would be competing against each other.
Obviously Activision didn't like that happening after all the investment they probably did invest into Destiny, they forced Blizzard into cancelling their "Project Titan" or that reason played some part in their decision.
The third reason is maybe Blizzard crapped their pants realising "Titan" would be competing with the Elder Scrolls Online in the scene for the next gen MMO and that their design based on hard targeting and auto attacking combat and uninspiring questing experience with crappy pop/celebrity in game references were going stale.
Anyone feel like adding to this?