There was nothing stopping them from doing MPEG4 prior to T16. What it brings is the ability to reach Puerto Rico (so they can retire 110) and Hawaii at full power (so they can use a Slimline instead of the AK/HI dish) and use the 6 transponders currently used for spot beams from 101 for CONUS broadcast.
MPEG4 is just a different way of organizing bits than MPEG2, the satellite transponders don't know or care whether the bits modulated into a RF waveform contain MPEG2, MPEG4 or chocolate chip cookie recipes in Welsh.
My understanding was it was a modulation issue on how they wanted the transponders configured versus an actual MPEG4 issue, they wanted to use S2 to squeeze more bandwidth out from the transponders in the combination of MP4 instead of DVBS and couldn't with the old bird as those modes were not supported on T8. But I could be wrong as this was 2nd hand info.
I believe it's a significant increase in bandwidth going from DVBS to S2 on KU, which would give them more capacity aside from the additional gains they would get from the encoding change as well.