I tend to believe Lucas on this one, that since he’d used the Wookiee in the first film, when he came to use the intended finalé he just decided to chop the Wookiees in half and use small bear type creatures with a reverse name of Ewok. Mainly I think this because he just decided to reuse the Death Star and loads of other bits and it’s patently obvious that the writing of Return of the Jedi suffered massively from Lucas really losing creative energy.
The fact that they end up cute is also, I think, a weird side effect. I think they are genuinely meant to be quite scary and nasty seeming but the nature of the film doesn’t really allow for it. I mean Lucas had David Lynch in mind to direct the film at one point and tonally it’s a pure mess in any case.