Is there any room to improve with the current resources?
Scotland have 2 teams where they can grow their own players, and they don't limit selection to "play on Scotland to play for Scotland" so they select the very best players available to them.
Man for man, how many Scottish players make the Irish, French or English teams?
I think Cotter returned respectability, Townsend has installed some expectations, but the 15 has areas of frank weakness, let alone the 23 or the injury replacements.
Scotland are beating the teams they should beat, and occasionally beating teams who ought to bee better than them, whilst mostly keeping things respectable against top opposition.
For me, Scotland are currently hitting above their level, in terms of talent across the 23 (or more realistically, 36) players.
Ireland have shown that it can be done with lesser resources than an England or France (or South Africa or New Zealand), but Ireland are absolutely maximising their talent, identification and development of future talent, whilst having way more resources than the SRU.
IMO, for Scotland to improve from here, it's that youth identification and development that needs the investment, including somewhere to play (2 pro teams just isn't enough, but there's not really anywhere to add a 3rd).
Improve the level of rugby below the best dozen or so players, and have a rising tide lifting all boats.
Of course, and IRFU style governmental assistance would help s well (IIRC not specifically IRFU, but Irish sporting bodies).