Well, a resangan is for killing people, F:RS is for killing monsters, so the Bijuu Bomb (perhaps it's "That Jutsu") would be a technique against semi-gods, or halve immortals, normally, you don't have people like that around even in Naruto world (it's thanks to Kabuto that there are more of them now, so Tobi was at that time, more or less the only one), so a jutsu of that power would useless, when you can still kill everyone with a lesser one (not counting those above monster level).
So your saying what ever this jutsu is the frog key dude thinks its overkill for that particular time period. And why bother risk naruto to deal with the fox if a less powered jutsu can still do the same job?
Well that could be it, since the key toad laughed at jiraiya for even suggesting madara is still alive and caused the fox attack on konoha.
The Master's Legacy
If a theory can't explain the mysteries of the past, it has little chance to explain the mysteries of the present and future.