That Cernunnos was popular with early Witches I have no doubt, but why he rose to prominence is another question entirely. He just sort of pops up out of nowhere and becomes the de facto representation of the Horned God in Modern Paganism. There's no slow build up, no real literary history to trace, He just conquers, and throws Pan off the throne that he was so poised to to sit on (or hump, it is Pan).
Cernunnos is an enigma. There's no mythology or stories. Can you name a Cernunnos tale that you read in elementary school? If you can, you are an incredible person, because none exist, unless they've been written relatively recently. Can you recite a few lines from your favorite Cernunnos poem? Maybe something from the 19th Century that you were forced to read in high school? Again, you can't, because they don't exist.
Now those myths and stories and poems are there for Pan. I've been reading Pan mythology since the second grade. I was familiar with Pan and Syrinx before I read a Judy Blume book. Pan shows up countless times in 19th Century literature, eventually owning the century and its poets; becoming the most written about deity in all of English literature. Most of us were forced to read Pan in High School, he shows up in Wordsworth, Keats, Shelley, and numerous other poets. Pan was a rock star (on and off) for nearly 2500 years, Cernunnos wasn't written about with any regularity until the 1930's.
If there's one person responsible for the ascension of Cernunnos it's probably Margaret Murray in 1931, but even then I'm not sure. Murray's inclusion of Cernunnos in her book "The God of the Witches" was definitely a turning point. In the first chapter of "Witches" Murray weaves together 15,000 years of horned god iconography and myths and turns it into one Horned God. Though she doesn't single Cernunnos out for any special treatment (she mentions Pan a lot too), she does make him the starting point for the Herne the Hunter* folk-tale and turns Herne into a full fledged god.
In one chapter Cernunnos becomes Herne, and Herne becomes "Old Horny." Who can blame people for wanting to worship a god called "Old Horny?" Hell, I'm down with it. It's probably at that one moment in 1931 nearly 130 years of Pan poetry get flushed down the toilet, and the goat-foot god becomes second fiddle in the minds of Modern Pagans.
Now, I don't want to sound bitter about this, because I'm not. Cernunnos is a fine deity, even if what we know about him is a bit lacking. For those of you wondering, as best as I can tell, Cernunnos was never a fertility god a la Pan. There are no pictures featuring Cernunnos with an erect phallus. He's usually depicted in a sitting position with legs crossed (we called this "Indian Style" at my elementary school). Celtic hunters often assumed that position because it's easy to get up from, so it's probably safe to say that Cernunnos is a god of hunting. He usually wears a torque and has money on his person. Those are obviously symbols of wealth, perhaps nobility, after that there's not a lot of consistent iconography other than the horns.
As Modern Witchcraft is a British Religion there are some practical reasons for the ascension of Cernunnos. While he's not "English" and depictions of him in the British Isles are lacking (perhaps just six or seven, and even then whether it's the god generally depicted in Gaul is up for debate), Murray made him English. Linking him directly to Herne suddenly gave him a British pedigree, and Celts did live in Britain, so even if there's not a lot of evidence for his worship in Great Britain, it's at least possible. Pan, despite the love many English poets felt for him, was Greek, perhaps the worship of Cernunnos over Pan was a matter of national pride?
Cernunnos has other advantages too, not just his nationality. He's a blank slate; he can be about anything you want him to be since there's no back story. No one can point out his foibles or his rapes, unlike Pan. For someone like me who is obsessed with figuring out how my gods were worshipped in ancient times, Cernunnos is a problem. For the majority of people who don't care about such things he has a lot of advantages. It becomes impossible for someone to tell you "you are worshipping him wrong**," since no one knows how he was worshipped.
As a piece of iconography he has some distinct advantages over Pan. Cernunnos more easily fits the modern "Horned God" archetype, which has evolved into a strong, virile, middle aged man with horns on his head, generally those of a stag or deer. With Pan you get the baggage of the 24/7 boner and the goat legs. While the goat legs aren't a problem on the cover of a book, the raging hard-on is, advantage Cernunnos.
Society at large also has "Pan issues." Since Pan has been used as a "Devil" figure for the past several hundred years he sometimes comes with pre-conceived notions. While Modern Pagans don't make the mistake of Pan=The Christian Devil, the public's knowledge of Greek Mythology and religion in general is not what it should be, and Pan=Devil has become a shortcut to thinking in our society. While horns aren't universally loved, they aren't quite as feared as goat legs.
In Modern Paganism the "Horned God" is supposed to represent "The Ideal Pagan Man," and the ideal usually doesn't include goat hair. (Which I think is a shame, but I'm probably a minority.) While Pan has many fans and followers, the ideal is generally two human legs, and a phallus that deflates from time to time so there's not too much funny walking in the morning.
Cernunnos has emerged as a powerful symbol over the past 80 years, becoming the most recognized Horned God in Modern Paganism. Even those who don't worship him by name generally honor a "Horned God Archetype" made more in his image than Pan's. While Pan's place in 19th Century literature created the woodland ideal of the Horned God most of us know so well, it ended up being the Cernunnos honored in ritual and art.
*While worshipped as a deity in Modern Paganism, the earliest tales of Herne were more akin to ghost stories than mythology. If Herne has his origins within Pagan Gods, it's more probable that his "father" was Odin/Woden than Cernunnos.
**That doesn't stop me from trying though.