I think you're partially right. I was in this hobby about 4 years before I heard of 2 rail. It doesn't get much exposure but I think the decline is due to many factors and not just one thing. Some of them are: the myths about 2 rail keeps guys away, older guys aging out of the hobby and/or reaching a point where they have all they need, and 2 rail guys are more likely to stick to the roads they collect or model whereas 3 rail guys are more likely to buy stuff that strikes their fancy.
I do not have the budget for a fleet of brass rolling stock. I wish I did the stuff is gorgeous so plastic is good enough for me. Last year I bought 3 MTH plastic passenger cars from you (Beth) in 2 rail and this year I have a MTH scale wheel locomotive on order with another dealer. At this point I have almost everything I need. I would someday to purchase a Niagara or a Ten Wheeler in 2 rail. I know USH did a Niagara that is nice but I am in no rush. I would be very tempted by RailKing SW if it had fixed pilots, Kadees and was 2 rail but most 2 railers wouldn't want it due to the China drive.
All opinion.
