Hello rugby rant.
I think you are right in saying that the regions in Llanelli, Cardiff and arguably Newport, all were able to keep some of their individual identity, where as the ospreys and warriors had new identities. I think what many people aren't asking is why? In fear of sounding like a broken record, Welsh rugby is not rich, has never had 10,000+ fans every week, and at the time the regions were created the revenue for the teams were extremely low. That in mind, the only men in Wales that could actually create four or five pro teams were private investors. Funnily enough, these private investors already had interests in Cardiff, Llanelli and Newport, and they were given precedent. I don't agree with that, by any stretch. At the time, a Cardiff-Ponty merge would have been fantastic and very very strong. A new name, wearing blue and white, playing at both grounds, I think could have worked. I would have gone, that's for sure.
But we need to understand that changing the game now would be almost impossible and four pro teams is what we have (not regions). The game has moved, teams are funded by 4 million pounds just for wages, and even then the French and English have 2x that. No one has the money, resources or will to wind regions up and make two teams. Even then, what if the 'fans' close the curtains on the two teams and argue that the club game is the correct one. As a businessman, you'd be mad to invest the capital required to make these two teams.
The only point I won't agree with you on is failing attendances. The attendances have been steadily rising year on year for years for mostly all of the regions. Perhaps at the end of this season, that might change slightly. Ospreys and Scarlets have an issue because their stadiums are too big and it looks awful when they get a 6000 gate.