As much as i love steam engines, the answer as others have pointed out is economics. Diesels in their core are relatively simple beasts, you have a diesel engine driving a generator in turn driving traction motors that drive the wheels. While you have to fuel a diesel, you don't have to continually fill them with water and a diesel will go a longer way on a load of fuel (obviously, less so in the 1950's, modern diesels are amazingly efficient).
On a steam engine, you have a complicated arrangement of the boiler, with the tubes in it, you have a series of cylinders and connecting rods to transfer that power to the wheels, and that brings complexity. My understanding, too, is that each mile of service takes a lot more out of a steam engine than it would with a diesel. I suspect, too, that in the post war world the standards of the FRA for steam engines likely got a lot more stringent, in terms of rebuilding and so forth, and it probably became more difficult and costly to maintain them (that is just my speculation, some of the other experts on here probably know more).
Manpower wise, you can MU diesels (primarily because they are electrically controlled in terms of speed, you are varying the power to the electric traction motors, so easy to hook up in series) which means you can have helper engines controlled by 1 crew, steam would require multiple train crews.
Probably what happened is that diesels by the time they scrapped the Alleghenies had improved to the point where they had the power they needed to run the long coal drags, and do so less expensively/more efficiently, and that settled the decision. They probably didn't take that much of a beating on the cost of those engines, 11 years doesn't sound like a long time but the way equipment is depreciated they often use rapid depreciation, so much of the cost is written off early in that 11 years, so they likely from a depreciated value view didn't have much left in them, so they likely didn't lose as much as you would think. As others have said, it is a business and when they weighed all the factors, apparently it came up that it made no sense to keep the steam engines going. I don't know if they got coal for free as part of their deal with the mine owners (doubt it, but you never know), but even if it was free, oil was cheap back then, too.