The more the knee bends the less leverage it has. The knee bends less as the crank shortens so even though some leverage is lost because the crank shortens leverage is gained because the knee is in a more favorable position to apply force so it is a wash pretty much. Then there is pedal speed. The faster the pedal is moving the harder it is to apply force to the pedal. Longer cranks tend to have higher pedal speeds. So, while it takes less force to generate power when cranks are longer it is harder to apply that force to the pedal both because the pedal is moving faster (usually) and the knee is bent more. Change one thing to make it better changes other things to make it worse. This explains why power stays pretty much constant over a wide range of crank lengths.

Another way to look at this is to look at what goes on around the entire pedaling circle. Power generation is more than pushing hard but also involves getting the foot out of the way on the backstroke. The best way to maximize the average power around the pedal stroke is to do what is called "pedal in circles", where the work performed by the muscles remains pretty much constant. This concept is more fully explained here. Below is an example of a real world pedaling pattern that can further explain why longer cranks rob the rider of power or why power doesn't drop (or increases) when cranks are shortened...