Could it be there was an available path to return north along with easier turnaround at Hemel. which may not have been the case at Watford ? There were following trains, it may have lead to platform blockage at Watford whilst turning. A cursory glance at Google Earth suggests there are crossovers north of Hemel station, where there aren't at Watford Junc.
Again - are you speaking with practical knowledge or as an 'armchair expert' ? Posters such as
@The Planner may be better placed to shed some light as to why Hemel was considered a better turnaround point that Watford Junc.
Hemel's hardly the middle of nowhere - it is a main station, there are, even at that time of night, buses running from the station - there is a bus which leaves Hemel station heading for Watford at 22.49 for example. There are always taxis at the front of the station up to around mid-night, usually to meet the late trains from Euston.