It was a bit of trickle down from the high end bikes. 27" was a USA standard, but better bikes from Europe were all 700c, which has the virtue of being the same diameter as a tubular (sewup) tire's rim.
So for top end bikes where builders wanted interchangeability between wired on and tubulars going 700c made sense. Also there was a larger market for high end 700c tires supporting a bigger selection. In the end, starting at the top, and working all the way down to the low end, we simply went with the flow.
There was also a benefit to the major USA OEMs like Trek who were now selling their Taiwan made bikes in Europe. Using the same size rims in both markets made too much sense to pass up.
Interestingly enough when I brought 2 bikes to Mexico, I was very confident that I'd have no problems getting 700c tires. Not so, they're still using our cast off 27" standard. (go figure)
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