What I don't understand is that if episode 7 is based on Lucas' synopsis, that the empire and alliance are in a cold war with both sides having equal power, why didn't he allow this idea to be used in the EU back in 1987 when he let Zahn do Heir to the Empire?

Was Lucas' original intention to have a New Republic with the Empire defeated (as in Zahn's trilogy) and now after all these years he decided to change that for episode 7? Or did he never approve of the EU and just let it go on since he knew he would erase it with whatever sequel trilogy he ended up doing?