I don't know enough about this area or the specifics of the project to have any opinion - the local concerns might be completely justified - but it is part of a general pattern of developments being rejected because they're 'too big.' Mixed use developments have to have a certain critical mass, a certain amount of locally generated demand, to thrive, and since the biggest concern, stated or unstated, is generally traffic, if it's big enough you can actually reduce the amount of traffic because not everyone will drive.
Though, as I said, for all I know this is a horrible plan.
