The title of the OP is a bit misleading... these aren't necessarily banned toys, they are failed toys, and many of them were recalled. That's quite a different thing. I proudly designed a couple of the 'failed' toys, I worked on the CPK Snacktime Kids, and we were so upset about the recall. We designers felt that it was completely contrived to sue Mattel- maybe it was, maybe it wasn't. One of my fellow designers had long hair, and we used to sit and try to feed her hair to the doll, and it never worked. The doll always stopped chewing. Mattel folklore was that a huge shipment of dolls, which were somewhere in the middle of the Pacific Ocean was unceremoniously dumped into the water. I have no idea if that's true, or just folklore! I don't want to start any unfounded rumors, but I think the whole episode was pretty sad.
Although I didn't work on the original Galoob Sky Dancer dolls, I did design all of the launchers and playsets for the Jakks Pacific (Playalong Toys) relaunch in the early 2000s. This line lasted for at least a couple of years, they had improved the wings by this time so that they were softer and less a 'weapon'. They were so cute!