It's rather simpler than that.

Railway companies were responsible for building their own stations, and to an extent, yes, the London terminals were temples to the company. Euston with the Euston Arch was, indeed, a dick-measuring contest. There were various proposals to share stations; for example, the GWR had running rights over the London and Birmingham into Euston. And the (by then) LNWR and the MR shared, to a greater or lesser extent over the years, Birmingham New St (and the problems caused by that are still with us today). But in the end, everyone wanted their own partly for reasons of prestige and partly to keep traffic on their own rails (running rights weren't free). Running rights had precursors in various rights to operate over other canals and those had often been the subject of extraordinary conflict over tolls and water, and the railway barons had no wish to make the same problems for themselves that had beset some of the canal. For example, the historic Oxford Canal formed the route of the Grand Union for five miles around Napston, and those five miles accounted for most of the older company's income. So by controlling your own lines you controlled your own destiny.

But in London there was a more fundamental problem. Building into the city would be fantastically expensive and disruptive, and in the mid-19th century there were a lot more schemes than were eventually built. A Royal Commission of 1846 set down a zone into which the mainline railways could not penetrate, bounded at its northern edge by the New Road (what became the Marylebone Road, the Euston Road, the Pentonville Road, City Road and so on) and at a similar distance all around the city. Without special permission railways couldn't come into the zone specified.

There was a proposal, which was rejected, to build a central terminal at roughly what is now Farringdon with a massive route into the city in tunnel from roughly Kings Cross station, but the end result was that with the exception of Waterloo stations were kept on the periphery of the city as it then was. Inside that zone there was very limited scope for surface railways and of course in 1846, or even 1946, running mainline steam in tunnels over those distances was not practical and building tunnels to UK mainline loading gauge would be fantastically expensive.

So they wanted their own stations, and couldn't go (from the north) south of the Euston Rd and its connections. Hence the line of stations from Marylebone via Euston and Kings Cross and St Pancras to Liverpool St and the historic Broad Street station: even had they wanted to go further south, they couldn't.

If you have ProQuest account, it's the 1846 "Royal Com. to investigate Projects for establishing Railway Termini within Metropolis. Report". There is a more accessible summary here: https://turniprail.blogspot.com/2011/06/defending-londons-interior-railway.html