A prequel would have much more limited opportunities; there would be a lot less weapons/armors/etc because they weren't in use at the time, not to mention many factions would have to be cut out: the SOD nations and the Calradians had minimal contact prior to the Invasion of Calradia, a lot of the mercenary factions were nowhere around yet, and Ponavosa was not discovered up until a few years before the start of SOD: Warlords. Sure, we could build up 'in-between' episodes, such as the Empire's conquest of the SOD nations prior to the Invasion of Calradia (from the Imperials' point of view) and whatnot, but these would be more trouble than they are worth, and would restrict the Player a lot if we enforced 'canon endings'. A prequel would be, in a lot of regards, taking a step backwards. A sequel, on the other hand...
I understand that there are quite a few players who dislike guns and prefer to stick to medieval warfare, but as I perceive it there are just as many who wouldn't mind taking pew-pew-ing a step further. In SOD: Warlords, there is a compromise - there are very few guns involved at all so long as you do not want to involve them. I think it's a fair trade, as it pleases both parties of players, but in a potential sequel, this may no longer possess a logical basis. But as I stated, it's faaar tooo eeeaaarly to worry over this now.