I actually think it's franchise protection. I suspect they were convinced, in heavy sales people/producer tactics, to allow Smallville to go head (rather than younger teen based series based on Superboy which had been mooted at the time), so they negotiated back hard for high cost of the license, in negotiating down to an affordable cost, certain stipulations were put in place, based on what was original told to them "It's a series about Superman before he becomes Superman", ergo he can't fly, and he'll only encounter minor heroes (not that GA is all that minor, but he was never quite in the league of your principle DC characters).