No sorry, the EU were not simply insisting that the border had to be in the Irish sea as if it was a demand from their side, it was simply the case that an Irish sea border was the only way that Brexit could conceivably happen without shattering the GFA into a million pieces. The GFA was only possible BECAUSE the UK was in the EU. It created a fudge whereby Republicans in the North could feel part of the Republic and Unionists could feel part of the Union with no meaningful border to disabuse that notion. As soon as you decide that the UK isn't part of the EU there must once again be a border, and the idea that there shouldn't be is even nonsensical to the Brexiter side too. How can you claim to be a totally independent country with control of your own borders while simultaneously demanding that you don't have a border?
The UK government agreed it it, because they had no choice. It was that or put up a border on mainland Ireland and almost certainly restart the conflict. By now trying to renege on that agreement and get rid of the sea border they agreed to, all they're doing is returning everyone to the same quandary they were in back before the withdrawal agreement was negotiated. It's insane because there is nothing new that is going to magically resolve that problem. The only answers are still sea border or land border. I suspect this time however the UK will simply try and fudge and force the EU & Ireland to be the ones to choose to either put up a land border or not, in a cowardly attempt to pass responsibility.
The cost is going to be a hard Brexit though, but then again half the Tory party seems to want that anyway, so it should hardly be a surprise.