Here are my ideas for Hiro's power troubles:

A) it could be a simple confidence issue. he's used his powers to get money, he failed to save that memory girl, etc. he could just be doubting himself and he feels he needs to get the sword to focus again. when he thought he was gonna acquire the sword he was able to slow down time a bit-- the anticipation and his belief in the legend of Kensei making his powers glimmer through his self doubt.

ORRR

B) He simply can't radically change the past because of some barrier that won't allow a time-paradox or any major changes to occur. it could also be his lack of skill at this point. He CAN affect things in the present, by freezing time, and spacially rearranging things. at this particular time that might be the extent of his powers til he hones his abilities and learns to properly affect time-- past, present and future. the funny thing is that this theory suggest a powerful and controlling god-like entity that dictates what can be done and not done.