Is it because of antenna sizes? At 900 MHz a 1/2 dipole has a size of around 15 cm. That would be far higher for 125 kHz, so instead we use coils to power the transponder and use load modulation for the reverse-link.
Does the low frequency have any effect on reflection? Reflection is dependent on frequency, low frequency waves tend to "go through" materials easier so we would have a harder time reflecting those through the transponder antenna?
Are those the two main reasons?