I'll address the second part of your question first.
Why didn't they build more of O'Neill's booster device?
Basically they did. Carter's work on what became the Mk1 naquada generator was the direct result of attempting to duplicate the power booster. It wasn't a perfectly straight line and it depended on learning some things from the race that used brain nanites to spread knowledge (which Carter also needed to figure out how to reuse O'Niell's original.)
It's also worth noting the booster was only meant to run a few minutes at a time while the Mk1 runs weeks or months at a time powering much of Atlantis later on. The Mk2 was just a Mk1 rigged to run at 500% output for much shorter times. So in fact they even improved on the original first by making the more stable and reliable Mk1 and then with the Mk2 that did the same thing with 5 times the output.
I suspect but cannot cite any evidence that either the Mk1 or Mk2 must match the output of the booster device since they were both based on and inspired by it. It only seems natural use it to base the operational specs for the requirement.
Now for why they still needed ZPMs...
The show rarely gives us detailed figures but we know from SGA, from the Carter-McKay gate bridge that the normal range of a Milky Way or Pegasus gate is 90,000 light years. That's because the 34 gates of the bridge are spread out at 33 points (with one of both kind of gates at Midway station) across the 3,000,000 ly span.
We also know that the power requirements of establishing a wormhole rise "exponentially" with distance. Technically by the definition of "exponential" all that means is that the distance/power relationship isn't linear, like 2x distance takes 2x power. That's why an exponent is needed. This could actually be less than one, meaning power requirements increase more slowly than distance (which would run counter to most people's misconception of the term) but in this case the show makes it clear that power required increases sharply as distance grows but without ever precisely quantifying it.
We were told that dialing the Asgard home world Othalla took ten times the power of a normal dialing, which the booster supplied. We also know that (at least later on) the show used real life galaxies and distances to them, such as with Pegasus. Though we are never told which irl Galaxy is Ida, we can reason that it's almost certainly either the Large or Small Magelleanic Could. I know some references place Ida 4,000,000 ly away but the show also clearly states it takes a ZPM to dial the 3M ly to Pegasus... So Ida can't be even farther away.
In fact if we assume that the "exponential" in power required "exponentially increases" is equal to distance cubed then a 10x power increase from the booster would increase range of the SGCs gate from 90,000 ly to just under 200,000 ly, enough to reach the Large Magelleanic Cloud. If instead power equals distance squared then a 10 fold boost gets you 280,000 ly. That's enough to reach the Small Magelleanic Cloud. No other (major) Galaxy is within 2.5M ly of us except Andromeda but again, that's barely closer than Pegasus.
Sorry for the long winded runup but the payoff is we can now estimate how much more power it takes to dial Pegasus compared to destinations within the MWG or the Asgard home world. Pegasus is 33 times further away than a gates "normal" range so given a distance squared relationship power draw would increase over 1000 fold. But if it's a cube rule then power drain is 40,000 times as much.
For comparison that means, if we assume a Mk2 matches the boosters output, Atlantis would need at least 1000 and as many as 40,000 Mk2 reactors to dial Earth. As of "The Siege" in SGA there were two working Mk2 that we know of. I think it's entirely possible that in the past decade or so they could've built enough and improved the design where they might not need a ZPM to dial to/from Pegasus or even power Ancient weapons, shields and drives. It's going to take up a lot of space though and certainly wouldn't run as long as ZPMs. Those are as powerful as an exploding star ya know.
But when SG was still on the air there just wasn't anything but ZPM they could possibly use to power distant gate trips or the Atlantis shields and hyperdrive.