Also, isnt He-Man allowed to be used now?
I haven't heard anything about that, although I could easily have just missed some news.
The rights situation, as I understand it...
He-Man was originally created by the toy company Mattel. They also made some mini-comics to go with the toys. Then (because Ronald Reagan relaxed the restrictions on advertising to children) Mattel contracted Filmation to make a cartoon (which was essentially just a 22 minute toy commercial, with actual commercial breaks). But then Filmation, not Mattel, was the one who came up with the idea for She-Ra. That's why there's a wall between He-Man and She-Ra, because Filmation increased their ownership stake in the property when they made She-Ra. Filmation needs Mattel's permission to do certain things (like, Hordak was originally created by Mattel, IIRC), while Mattel needs Filmation's permission IF they want to step beyond He-Man's original ideas and get into things that were exclusive to the 80's cartoon.
Like, He-Man in the 1987 live action movie never transformed into Prince Adam. That
might be because the movie was greenlit by Mattel, without Filmation, and in the original mini-comics, He-Man and Prince Adam were two entirely different characters.
Filmation went bankrupt, but their remains were bought by someone, who was bought by someone, who was bought by Dreamworks. So Dreamworks is essentially Filmation now in this new scenario. And that's how Dreamworks (with the help of Netflix) was able to greenlight and make a new She-Ra cartoon, because Dreamworks/Filmation has a stronger rights hold over the She-Ra IP.
Mattel meanwhile, has been trying to get a new live action He-Man movie made. They've recently gotten a lot of traction with getting Sony Pictures on board to make it, and it seems like it's really gonna happen this time. They're re-releasing a bunch of G1-style toys to try and generate nostalgia, and Kevin Smith just announced that he's making a new cartoon which is supposed to be a canon sequel to the Filmation He-Man cartoon (because they're trying to generate nostalgia). But then, if it's a Filmation sequel, then that probably means they got Dreamworks to sign off on it. And Mattel is finally making some new She-Ra toys (Filmation never had any toy rights). It means that Mattel and Dreamworks are openly negotiating and doing business with each other.
But it's been suggested that Mattel doesn't want any distractions for their upcoming live action movie, because the movie is too important to them. A nostalgia cartoon is fine and can work as an advertisement, but it would confuse the audience to have a new He-Man on TV while there's another new He-Man in the theaters. Also, if Mattel did allow He-Man to appear in She-Ra, Mattel would probably try to control his appearance, which would significantly reduce Noelle Stevenson's creative freedom, which would be a bad thing.
But then, it has also been suggested that Sony has grown concerned that the new He-Man movie might bomb horribly, and that it might be a better idea to put it on Netflix, where She-Ra is currently thriving. Which might mean that Dreamworks/Noelle Stevenson might have pulled off a coup. Sony might be looking and asking why Mattel/He-Man isn't following the lead of She-Ra and the Princesses of Power.