I have another way to look at the "MPC" era that perhaps some will consider......
Prior to the mid 80's, the only way that some of us could relive (and afford) our post war days was through the purchase of the new Lionel that was being produced from 1970 on. Now....I am not so sure that I agree 100% that this time period saved the o-gauge hobby because by the mid 1980's, Williams was offering some "scale-like" equipment independent of the toy train market. Jerry Williams arguably could be considered one of the pioneers of what has evolved into the scale market today. Mike Wolf is another person that was part of that movement when he was working with Lionel in his earlier years.
Without guys like Jerry and Mike, I am one to believe that we may have still been limited to the post war like trains with some improvements electronically...AND...paying prices that back in the time period were very high for the kinds of features which were available. Remember the Lionel dash 8-40C from the late to early 90's? The prices being charged for that locomotive were as much or more than you can buy a scale version with all the wonderful features today.
So...I feel there is a possibility that the hobby has advanced and survived not because of the MPC era but more because there were folks / manufacturers that offered what the market was looking for at the time.....more scale-like models with advanced features. As a matter of fact, those same manufacturers helped create the demand with their marketing of the scale equipment. Without that turn of events, perhaps the 3-rail hobby would have taken a post war path......who knows??
In any case, we are very fortunate to have what we have today! PS-1 locomotives are a bargain and in many cases look as good as their more recent counterparts. I have found that if you install a BCR, one ends up having a very good runner and model. Folks seem to forget that you really can't compare PS-1 to more recent operating systems because PS-1 was never designed to be anything other than a conventional system with some fancy sounds. Unfortunately, MTH didn't design it to be backwards compatible so to catch up with the market demands, they designed PS-2. Yep, the public relations concerning PS-1 was badly handled...but if you can get your mind past all of that, PS-1 locomotives are a wonderful bargain in the current market for those that don't have to have all of the "bells and whistles"....
Alan