From what I've read, SVT has a performance version of everything Ford builds. In conjunction with Roush, they had actually developed a killer T-Bird SVT in the mid-'90s, but the project got killed (by the death of the T-Bird) as soon as they got the bugs ironed out. It used the 4.6L DOHC, and it didn't suffer from the overheating problems that plagued the Cobras of the same vintage.
Part of the problem (which the new head of SVT has vowed to fix) is that SVT was treated more as a "tuner" operation within Ford, when they needed to be involved in the design process. That's why there's no Lightning on the new F-series platform; they were excluded from (or, at least, not included in) the design process, so, at this point, they can't do it economically. As he put it, it's easy to build performance into a $100K car; the trick is to do it in a $20K car.
But, again, from what I've read, there wouldn't have been an SVT LS regardless, as SVT was supposed to be (and still is) Ford-brand only. As for SVT engineers being surprised that the LS engineers would try to develop mod-motor performance, all I can say to that is "nuts"--they should know better. If you'd developed the LS, would you turn it over to some other group for performance development? Me neither.
It has nothing to do with arrogance; it's what engineers do. That's how they progress in their profession--they push the boundaries, doing things they've not done before.