"Most changes for "realism" have really hurt the game in the long run."
While I agree that unless there are some distinct changes things won't get better, I don't think this is the cause. I play a free **hardcore RPI MUD that is older than CF and is as real as it gets -and it is thriving. The early morning lows are usually in the 20s with peak times generally around 70 or higher. I don't think that it is rare to break 100.
CF is fun, but it needs to scale based on the theme and the times. I think some of the problems come from the amount of time that has to be invested with tasks that just aren't fun for a crowd that aren't all teenagers anymore.
**Realistic, RP (not CF-RP), one life, unrestricted PK, consequences for actions, Darksun theme, etc.