May be an obvious question, and I never expereinced them 'live' but the Class 74 diesel engine is rated at 650hp, the Class 73 at 600hp, so what was the point...
I realise the 74 had more power on third rail, but the 73 was already successful, if they had been able to squeeze in something that would have given 1000hp+ on diesel then it would have been an improvement, but otherwise they just seem like a 'dead end' in terms of development.
They were a 'dead end' in terms of development, being intended primarily for hauling Southampton boat trains which needed 'last mile' diesel capability to get inside and around the port. For that use, 650hp was enough. The 73's weren't powerful enough on 3rd-rail (and probably too useful elsewhere), and the 71's could be spared.
AFAIK the rolling stock program to go with the mid-1960s Southampton/Bournemouth electrification project was based around rebuilding/re-engineering/adapting existing stock where possible with minimal new-build, hence the cl. 71 rebuilds into 74s, the cl. 33 push-pull conversions, creating 4TC units (and 4REP trailer cars) out of existing Mk1 hauled stock etc. BR didn't have the money to do much else, and the class 33s and 71s weren't that old in the mid-60's, neither was the hauled stock - and of course to some extent the Southern Region inherited the Southern Railway philosophy of recycling old into new.
IIRC, the cl. 71s had a flywheel-based temporary energy storage system to get them over 3rd-rail gaps (like the earlier experimental CCx SR electric locos). For the cl. 74 conversions, that was removed and a diesel engine, generator/alternator, cooling system, fuel tank and extra electrical/electronics kit was squeezed into the space instead. Based on comments I've read over the years, it wasn't an easy thing to do and that contributed to their reliability problems. I particularly remember reading a comment from a senior BR engineer involved in the cl. 74 project, along the lines of 'never again' as far as doing that sort of major conversion.
Shades of the 769s conversions, really.