It may not have been for the reasons we were told.
According to Michtovim Blog it may have had more to do with infighting, Mesirah, and no-good students than just the refusal to learn any Limudei Chol. It never did make sense to me; after all, if Telshe in Lithuania LeKatchilleh had Limudei Chol why would Volozhin close down just because they were FORCED by the Czar to implement it?! Today many in Eretz Yisroel use Volozhin as proof that any and all Chol in Yeshivos is Treyf. That it's better not to learn than to learn Chol as well as Kodesh.
Rav Steinman discusses the 2 different approaches to the learning of Mussar.