@RyanSnyder should be able to provide more details.
Yes, Gatten is a legacy, attends PCC, plays LB, is well thought of, and was offered by PSU. In some instances, that might be enough to make him a part of PSU's recruiting class.
For whatever reason(s), it appears that PSU moved on from Gatten. Numbers are always a factor in recruiting, and it seems as though PSU is only taking 2 LBers. Numbers are somewhat fungible in recruiting, and if a super elite LBer decides later this year that he wants to be part of the '26 recruiting class, PSU's class might be 3 LBers. But at this juncture, it looks as though 2 is the number, and they've gotten verbals from 2 LBers.
Part of the fungibility of numbers is that many recruits are still growing. While anything is possible, most of the time if a LB prospect has a good chance of growing into DE size, that's mentioned during recruiting/when a prospect verbals. From what I've seen, there haven't been any indications of such with the two LBers from whom PSU has gotten verbals.
If you look at the bigger picture (all teams recruiting him), there are some trends. A lot of elite programs offered him in 2023 or 2024. And he visited many of those schools (PSU, ND, Mich, etc.) or their coaches visited his home/PCC when they were allowed. But this spring is when things get serious for HS juniors, and it appears that his visits this spring were to schools that were a tad below elite. It's tough to track all this stuff (without contacting the prospect), but it appears that he visited VT, WVU, Duke, Kentucky, Louisville, etc. this winter/spring.
What has knocked him out of contention from elite programs? I don't know the answer to that. A lot of the top schools are now offering 'ships earlier in the process, and then fine tuning their targets as they get junior season film, get to visit with the prospect, talk with sources, etc. FWIW, Colsen lists himself as 6' 1.5" tall. But the last verified measurements that On3 has, he was 6' 0". (I don't know when this measurement was taken.) Colsen lists his weight as 220 lbs., but the last verified measurements that On3 has, he was 207 lbs. (Again, I don't know when this measurement was taken.) So perhaps he's a tad bit smaller than top colleges are looking for at LBer. Or, perhaps there are things on his film that has caused some of the elite programs to back off from Colsen. Or, it could that his size and his film is fine, but the size and film of other LBer prospects is just better.
Anyway, without any direct info, I can't answer your question specifically. But by looking at whatever bread crumbs are out there, it does seem that PSU backing off of Colsen is for reasons that have nothing to do with him being a legacy, or playing at PCC, or being a PA prospect, but rather for reasons (whatever they are) that are shared by all of the other elite CFB programs.