I've been using LCY for over 10 years. The "You can't check your bags 2 hours before your flight departure time" rule has been in place for those 10+ years. It is nothing new. An almond croissant and latte at Pret has always been the main beneficiary of this rule for me… Perhaps they are the sponsors?
BTW turning up early for the Sunday 1250 departure home to IOM is pointless. The baggage belt is the king. Until that moves nothing happens. And although it is scheduled to move at 11am (1hr40 before STD) my experience suggests it moves around 11.10. So no point in trying to check in before 1hr30 before departure time then.
Pre "hyper security" check in anywhere was around 1 hour before departure. We are now conditioned to the BAA 3 hour let's go shopping rule I guess.