I won't argue with your assumption that the game is still going because of these points, but it being too hardcore isn't why the game population started to die in the first place. I know this is an individual experience but I knew a lot of people on my server and not one left the game because it was too hardcore. Most MMO's just get boring after playing for 6-7 years. But even that isn't the real reason why it died.
SE was just very poor in putting out new content. About 6 months after ToAU came out is when I started to notice the decline. People left because they were still doing the same things. Sky, Sea, Dynamis, 3 kings. That's it for many years. The new NM's and content that came out from ToAU was mostly worthless in terms of endgame progression. ToAU was out for quite a long time before they finally put anything out of worth. The decline continued after WoTG because of these same reasons. Endgame content was still very slow. Sky, Sea, Dynamis, 3 Kings, were still major parts of the endgame content, nyzul isle and salvage helped but wasn't enough.
Everyone I knew quit because the game simply got boring. It had nothing to do with how hardcore it was, it had nothing to do with timesinks. SE was just very very bad at adding in new endgame content. They were not only slow in adding it, but when they did we got crap like Hydra that dropped almost nothing of worth so no one bothered doing it. Then when new people started to leave, naturally less people were leveling jobs so any new players the game got suffered due to it being built around party play. I think that is mostly why Abyssea somewhat "saved" the game although it also lost a lot of people due to it's casualness.
Anyway, I'm not advocating a time sink filled game. I personally don't have time for it. Just setting the record straight, because I think the assumption that XI failed because of it's time sinks is an incorrect one. Just remember, even WoW has had a lot of time sinks throughout it's popularity and during it's popularity spike. I would argue that the endless rep grinds were even worse than most of XI's time sinks. Not to mention repeatedly doing dungeons you were long since bored of just to get this 1 piece of gear to move onto the next boring tank and spank filled dungeon. They just added to the time sinks with achievements. Do this many quests in this area for this quest achievement! /hug 20 critters for this achievement! Travel to every boring part of the world for this achievement! Do this thing that takes many many wasted hours for a re-skinned mount that does everything all your other mounts do! YEAH FUN!!
At least XI didn't try to sugar coat their time sinks. Or maybe they should have. It's worked so well for other games.