It sounds like the Forum, and the Folks at Lionel could use a bit of different perspective:
First: It isn't the 50s anymore. If Lionel produces a well done engine, with new tooling and lots of features, people will buy it. The World is smaller, and the regional relevance of products matters much less than it did in the postwar days. This is why Locomotives like the Western Pacific F3s and the M&StL GP9 didn't sell well in the 1950s, and are now valued collectors items. I live in Minnesota, and I love buying items that are from railroads like Wabash, NYC and Rio Grande, railroads that I would never see from my back porch; it's a different time. If Lionel does a newly tooled model of a Wabash 2-6-0, or a Denver and Salt Lake 2-6-6-0, it will sell because it is a well done model, not because the model is regionally relevant to the people who buy it. Just because a locomotive is obscure or from a somewhat foreign railroad, doesn't mean the market for that loco shrinks to the size of the railroad's following. Buyers simply love new toolings!
Second: Developing a new tooling is a LONG TERM INVESTMENT, at least if Lionel's current production habits are continued in the future. Just because a tooling may not be all that profitable the first time around, doesn't mean it's a bad idea to develop that tooling. Take the Niagara as a perfect example. People bought the loco during the first production run because it was a well done model, superior to it's competition, such as the Williams brass version produced in the 80s or 90s. Lionel has just proven that there is a market for re-hashed toolings, because of all the excitement drummed up around this Niagara. I truly think it is a great model, with really cool features, new and old. And even though the loco has new features, Lionel will probably profit more from this run than the last, because they don't have the initial cost of the tooling to worry about.
Now, with all that said, I think the Niagara is a great model that will succeed, if it works when it comes out of the box. I think the folks at Lionel know what they're doing with this one, and are headed in the right direction. The pattern set in the last 6 months to a year is a good one to follow, with the Niagara and the Santa Fe Hybrid loco. A new locomotive produced with quality and accuracy in mind, and a rehashing of a popular engine, loaded with new features. I would buy both, if i had the money, and the space to run them. I hope this provides a new perspective on the present Discussion.