Sean, that the best written post I've read for a long time and sums the situation up perfectly.
Something I'd like to add is that on the "nostalgia" scene there is a sizeable number of people who aren't being nostalgic. What I mean is that there are people who were never there in the 70s, they've stumbled across the scene in recent years either via going with a partner or mates or in some other way. Before the plates start being thrown, I'm not saying theres anything wrong with people who weren't there.
BUT these people don't and cant be expected to know the ins and outs of the scene, how things were or how they should be and any arguments such as this would mean absolutely nothing to them!
To give you an example theres a night local to me which is actually on tonight, very successful with over 300 in every month. I don't go very often but the last time I went I counted in my immediate vicinity around 20 people who I know, out of this 20 maybe 12 or 13 had no history on the northern scene and had probably never been to a soul night 5 years ago. Its basically an over 50s night out for a fair chunk of the crowd and I daresay the music doesn't mean an awful lot to them.
Dont get me wrong I'm not saying everyone is like this or that theres anything wrong with over 50s going out and enjoying themselves but this type of pesrson has swelled the numbers considerably.
All this adds to the pressure to dilute or dumb things down to please the maximum number of people, keep everyone dancing and coming back next month (Mr DJ - whatever you do dont play a record that they dont know) to the detriment of the whole thing.