If I may weigh in here, I don't think PW collecting or operation is dead at all, nor will it ever be completely dead.
I'm 41, so I have no first-hand experience nor the luck of seeing the PW trains when they were brand new, having that excitement of getting the catalog, record, layout planning book and the subtle "note for Dad" package in the mail and wondering what innovations Lionel was going to come out with in the next year.
But, from an operation and collecting standpoint, I will say that I still see a focus among people I see at meets on the PW stuff, no doubt. In fact, someone had purchased a 1950's Scout set in nice shape for their son to get him started in trains, and chose it over some modern sets.
Even 1960's Lionel has a good amount going for it, in that there is still ease of repair and durability.
In my opinion, PW collecting nor the demand will die out. There is, as mentioned above, ease of repair (I see more threads on here about boards that fry, reprogramming something to make it work, etc.) I can get into one of my PW locos with a couple of screws removed and take care of most repairs at home, without the need to go to my LHS and have it shipped back to China or Lionel to be repaired.
There is also cost (and through that, accessibility): because of some of the issues I just mentioned, I simply refuse to pay up to a couple thousand dollars for a locomotive, brand new, to run the risk of a board blowing up, it not accepting a code on TMCC or something else that simply shouldn't be happening on a factory-fresh item. Inexcusable. Apart from that, I simply don't have that much money to be paying for a train. I can get a nice PW set or locomotive, and sometimes not break $100 or $200 for it, take it home and start enjoying it right away.
As for Lionel still making the same thing they did in the PW period, we'll have to agree to disagree. I can take apart the new X242 in the new Scout freight set and see a circuit board, a smoke unit and a small can-type motor that may not last. I can take apart a 6110 or 1110 and see a smoke unit and heavy motor that I can repair and maintain at home, and it's seen over 60 years of service on rails under Christmas trees, layouts, pulling passenger and freights, and now with me for my enjoyment.
Some modern equipment (including some really expensive pieces I've read about on here) have been relegated to the shelf because they're internally damaged and may not be repairable.