Rusty,
I have no doubt that the S sales of the Polar Express are less than the O sales even with the second run. The point is there is a second run. Everything is relative. There is nothing Lionel can do in S that will out-sell the same item in O as the Market is larger. So relatively speaking in S, Lionel has to make judgements as to what would be a good seller in S. If they can produce a Thomas the Tank Engine train and it outsell the S scale Polar express then that would be a good investment plus it may take business away from Bachman's Thomas line and grow the S scale line a bit more.
--Rocco--