The same technically goes for old raids, no? Going in min iLvL synced for the challenge and all that. Except nobody (hyperbole for: Only a few crazy people) does that. Oh, and you can also name chocobo racing - also a game within a game. Lord of Verminion! You can also mention PvP in that line. Triple Triad! All suuuper popular and relevant. Right?
Yeah no. I totally agree that it works in games that are not MMORPG. A great many things work flawlessly in such games, such as having your save file deleted upon defeating the final boss with the only option being new game, getting the same rewards for something on very easy as on very hard, cheating to your heart's content, undoing your progress after every match, killing vital NPCs and preventing the MSQ from proceeding and a great many more, the list is pretty long and far from everything on it is going to be relevant for this case.
MMORPG work different and while I cannot provide you an exhaustive study on how they work, it's pretty clear that a lot of content that is "there to be challenged" is simply ignored by large masses of the community. And that has something to do with human behaviour.
When people come to play a game, they are seeking enjoyment. That's an ambiguous term, because it includes not just the genuine fun from being engaged by the content, it also includes enjoyment from pretty lights and characters, satisfaction from overcoming their own flaws, satisfaction from becoming more powerful, compensation for their small ego via social acknowledgement, satisfaction of greed and many other things. That's the driver, what makes people do stuff.
And just about every content in this game is going to appeal to one or more of these components, which the player will internally weigh against each other (preferences come into play here) and pick the activity he/she gets the most use out of. All fine and dandy so far.
And this is where the issue comes in: Rewards. Rewards are there to appeal to these components as well and thus, control people's behavior. Even if you would get more genuine enjoyment through engagement out of a certain piece of content, say, Triple Triad, you'll be lured away with appeals to other components of enjoyment somewhere else, like Dun Scaith. And how? By giving Dun Scaith better rewards than Triple Triad, for example by appealing to your enjoyment of stat progression and giving Dun Scaith progression relevant gear but not Triple Triad. And this is something that SE uses a helluva lot.
Lo and behold, content without rewards or where rewards have been attained dies quickly. No surprise there. And the worst of it, in the process, they are killing your original intrinsic motivation to do the content. That's something rewards simply do - interest in the actual activity goes down, replaced by interest in the reward. See also: Why speedrunning is popular, even in PotD.
As such: I'm sorry, but I do disagree PotD will remain relevant "just because". The rewards are all that keep it alive IMO.