Once out was always out, at least in the past or not ? - and that was the right thing to do.
No, it's always worked this way. It's just that in most places - and even in Colonia when expansions were slowed down more by intervening wars, retreats, etc. - getting back round to the end of the list would take a long time, generally long enough that most people would have forgotten it had been there to start with.
The order of expansions is as follows [1] (unchanged in 3.3):
1) System within 20 LY cube, system has <7 factions, no previous retreat
2) System within 20 LY cube, system has <7 factions, previous retreat
3) System within 20 LY cube, system has 7 factions, no previous retreat
4) System within 20 LY cube, system has 7 factions, previous retreat
5) Expansion fails, but next expansion uses a 40LY cube instead
If there's more than one suitable system at any level, it goes for the closest.
Most factions have so many options under '1' that they never get as far as '2'.
I think a case could be made that swapping '2' and '3' in that list would give a more dynamic BGS and more interesting strategy around expansions, but it wouldn't affect that many factions in practice.
[1] I'm not sure how the extra difficulty in expanding to permit systems fits into this - whether they slot in at 1.5, 2.5 or 4.5 - as there aren't any round here to test with.