I have doubts that was the reason the Attraction was changed from 'Alien Encounter' to 'Stitch's Great Escape'.
It had more to do with an attempt to try to 'tone down' a experience that was far too frightening for many Guests.
At the time when 'Alien Entounter' first opened, it was considered a Attraction that pushed the limits somewhat for some folks.
That can be interrupted as something good ( amazing show, great use of tech, etc. ) or something negative ( experience being far too scary for many Guests ).
I have often heard that it was one of the top Attractions for Guest complaints, mostly for the scare factor.
Some felt it was too intense.
Some did'nt think it belonged in the MK and should have been placed in Studios instead.
It ended up causing a lot of grief for Ops and Guest Relations....so there were plans put in motion to develop a similar 'sensory' experience but remove most of the 'intense' elements..
When the film 'Lilo & Stitch' was released and became a huge, surprise hit...the answer was right in front of them.
Replace the realistic, uber-frightening alien with a less threatening character.
In a twist of irony however, 'Stitch's Great Escape' ended up scaring lots of kids, freaking out some parents, and continuing the previous Attraction's tradition of regular Guest complaints!
So nothing has really changed there...when you think about it !