Edward F. Murphy, in his anthology of WWII Medal of Honor recipients, leaves an entire chapter in his book to explaining the history of the MOH and its development into the highest award for valor in the US military. He touches upon, shall we say, the earlier questionable definitions and criteria of valor.

He puts it in perspective by stating the following; at the time of his books publication, 3, 417 soldiers received the Medal of Honor. The Medal of Honor was originally signed into law for Naval 'acts of heroism' on December 21, 1861. Similar legislation was signed for the Army in 1862. Originally, the Medal of Honor was meant to only be rewarded for acts conducted in suppression of the rebellion, and as being the only medal 'for acts of heroism', was awarded quite liberally. 1520 medals were awarded during the Civil War - a substantial percentage of the overall awarded medals.

This loose definition, lack of other medals, and early, temporary nature of the medal lead to very strange awards; such as the 20 handed out for the Wounded Knee massacre. Which, by the by, was largely viewed as a proper, desperate battle by contemporaries and near contemporaries.

In Murphy's own words:

...there were no other medals then. It was the medal of Honor, or nothing. In too many cases, it was the Medal of Honor. Actually, the number of medals awarded would be much greater, and the corresponding dignity lesser, if the army had not convened a special board in 1916 to review all its awards made up to that time. It rescinded 911 medals, 864 of which had gone to members of the 27th Maine Infantry for voluntarily extending their enlistments for two days during the Gettysburg campaign....(Murphy, Pages 1-3).

As to why they've have never been rescinded, most likely because the events closest to the actual date of the battle fell in line with the answer I linked; further attempts were probably viewed as too problematic/irrelevant. Bureaucracy.

Source: "Heroes of WWII" Murphy, Edward F. Random House publishing, 1990.