The heat started for Shawn as well when Bret was off during Shawn's title run, and he was writing newspaper articles calling Shawn gay and a ****** and badmouthing his parents for raising a person like that, and saying other stuff Shawn didn't appreciate. Shawn knew that they wanted to keep the story line going but felt that Bret went a little too far. Shawn also felt like Bret was a phony and a liar for acting one way in person then burying him behind his back to others and to dirt sheets. The knee injury added fuel to the fire.
Yes, they wanted Shawn and Bret to be connected with story lines, but that didn't necessarily mean they were going to get a match out of it right away. Both Bret and Shawn felt the office also riled both of them up about the other, playing both sides against the middle.
The newspaper articles were all a work.
It's been well documented by both of them, that:
1) Bret knew he was going to be replaced by Shawn eventually, that didn't mean they couldn't still work together
2) Bret pitched the idea of a long-term feud to Vince, whether Vince bought any of it or not, is all speculation
3) Bret wanted to draw money with Shawn, hence the shoot/work articles while he was off in 1996
Like him or not, the fact is, like most champions, Bret was an egotistical, greedy son of a bitch. He wanted to make money. And he saw money in his feud with Shawn.
In Bret's eyes, WM13 was not meant to "Return the favor", it was meant to keep the storyline going. They'd eventually have the final payoff in a rubber match sometime later in 1997 or in 1998. Bret said he'd always put Shawn over at the end.
Shawn "losing his smile", from Bret's standpoint meant that he didn't want to put over Bret... Therefore, Bret refused to put over Shawn... hence the screwjob. Whether any of this was actually planned by Vince, we will never know. But that's how it worked in Bret's head.
From Shawn's standpoint, you're right... He felt he finally went over Bret at WM12 and didn't want to look back. In fact, he didn't want to look back so much he refused to put anyone over. Including Sid. Including Taker. Including Davey. Including Bret.
At the end of the day, it's all just immature, lack of communication.. that turned into a real life feud. And for better or worse for those involved, ultimately changed the face of the wrestling business.
I do wonder though... If Bret and Shawn took place at WM13, what would have happened to Austin? Bret and Austin were in the middle of a heated feud at the Rumble and at the final four. When was the payoff happening? Similarly, if the plan was for Sid and Taker at WM13, what would have happened to Shawn? What we the original plan for him at WM13?
I think Vince's original plan was always Bret and Austin... And it was probably Shawn/Taker for the belt.. But that all changed with the infamous Shawn "lost his smile" promo.
One thing to add here...
Shawn was never meant to be a babyface. The review on the first page shows it.
Sid was a heel. Shawn was the #1 babyface. Yet there were huge "we want Sid" chants during Shawn's promo.
Shawn is a natural heel. Always has been, until his first retirement in 1998. After that he was a great face. But his initial run was always that of a heel.
Part of what likely frustrated Shawn was that Vince, as he often does, shoved him down our throats as the top babyface. And fans eventually turned sour on him. This also threatened Bret's place in the company, hence the insecurity between the two of them.
Vince wanted Shawn to be the next Bret, the same way Vince wanted Bret to be the next Hogan. It wasn't until Shawn acted like the cocky D-X asshole he really was until he finally came into his own, in my opinion.
