I'm not buying it being hard to market at all. Even if some aspects of the game were somehow difficult to market, none of the blatant strengths were exploited smartly well in advertisements. Which I suppose is reasonable, as there was nearly no advertising anyway. Compare it against high profile releases from Microsoft, and it looks even worse. I don't think it's the only reason for its relatively minor impact, but a better campaign wouldn't have hurt it.
I agree with the characters bit, though. Gears succeeded in giving you iconic antagonists and protagonists, whereas KZ has always been focused on the antagonist. But this is nothing that would have been apparent for prospective buyers; at worst, it would have been a COD situation, so I don't think that hurt in terms of sales potential. I'd say that the focus in advertising should have been on the environments, but then those environments aren't exactly inviting. So maybe I'm disagreeing with the first paragraph here, slightly.