As I recall, they decided not to use them because the possessed could be exposed because the bug wasn't completely inside the victim. And they believed that the act of possession killed the host.
So, we got Picard season three instead.
I just looked it up and there are two origins of the parasites. Both fall on old Star Trek tropes
1. The books had them being Augments of Trills
2 the MMO had them being developed by the Iconians to control the Vaadwaur
I read that book. I THINK it said they were a "cousin" species to the Trill that were driven from the planet for trying to force themselves on their hosts
Been a long time so I'm not COMPLETELY sure
Well they were cousin species but apparently later disease and subsequent genetic treatment drove them mad. I am going of Memory alpha here though so I could be way off
At the time I really thought this episode meant a big new long-term direction for the show. And one influenced by the War of the Worlds syndicated series airing at the same time (and on many of the same channels.)