I don't think it should be ruled out. We need drastic changes here to turn this around, and the stark reality is there simply isn't enough supporters in South Wales to support 4 professional sides. How you do that without alienating another group of supporters? I don't really know. East, West, Central regions in South Wales would make sense, but Cardiff's current attendances is one of the few positives in Welsh rugby recently, so retaining a side playing at CAP would be a must imo. Swansea is the next largest population base, so retaining a side there would then make sense.
Being brutally honest, when you look at Wales' spread of population, only 2 sides in South Wales really makes sense, unless you can re-kindle the valleys hotbeds with a side based in or around Merthyr - attendances were poor at the Celtic Warriors though, so that's failed once already!
Still, a concentration of talent and money would provide the short term shot in the arm I think Welsh rugby needs at professional level (combined with improved coaching at the regions and massive restructuring of player pathways); BUT, a plan would be needed to return to 4 professional sides within the next decade, ideally in North Wales to try and engage the other quarter of our population.