I seriously doubt that Large Scale is dying, or in any danger of doing so. Trains in general appear to be doing well this holiday season, despite the very poor economy. I imagine that the departure of LGB has had an adverse impact on Large Scale to some extent (as I predicted it would back when it happened), but my guess is that several of the remaining manufacturers--Bachmann, Aristo, USA Trains, Accucraft, and MTH--are probably holding their own. Certainly public interest in Large Scale and garden railroading has not waned, and many local and regional shows are reporting their best attendance ever (again, likely a result of a very weak economy where folks are seeking less costly forms of family entertainment).
There is a whole lot of attractive product available in Large Scale, and more on the horizon. I wouldn't be too quick to spread a doom-and-gloom outlook because observations made in a few local hobby shops should not be considered reliable indicators of the health of the hobby as a whole. There are a number of very viable and successful hobby shops around. There also are a good number that will continue to fall by the wayside because they don't have a good feel for the market they are serving.
As far as pricing is concerned: Large Scale is, by and large, a good value for the dollar. Compare Large Scale pricing with higher-end O gauge, for example. While I recognize that bottom-feeding has become a way of life for some hobbyists--the result, I suspect, of the influence of eBay and the Web in general--there still are plenty of folks who value their purchases of trains and other consumer products more fairly and realistically.
