Dancey's strategy with the OGL was always to off-load the non-core products and turn WotC into a company that produced evergreen core rulebooks.
Dancey left the company and the strategy died with him.
Neither part of this is completely true.
In the first part, you conflate two separate strategies: Driving growth of the D&D player network (and core rolebook sales) through the OGL; and avoiding marketplace fragmentation through a strategy of limiting releases and not supporting a plethora of game worlds.
In the second part, you imply that the strategy was abandoned when Ryan left WotC in 2000/2001. While that might
seem true in the context of your assumptions, it's worth noting that the release schedule through 2002 was laid down under Ryan's tenure.
It is certainly true that strategic focus evolved after Ryan left (as it almost certainly would have had he remained--every successful business strategy evolves), but the core of the two strategies remained in place throughout the 3rd-edition period and, as far as I can see, remain in place to this day.
I'm still pretty convinced that [the failure of early hardcovers], more than anything, prompted the rapid launch of 3.5: The new edition allowed them to reboot their splatbooks, which had previously been treated as throw-away products under Dancey's business plan, as the core sales vehicles for the company.
The reason given at the time was that 3E had a number of relatively small but significant flaws that were detrimental to game play; a lot of lessons had been learned and the only way to implement them cleanly was through a reissue of the core books. I wasn't in Brand at the time, so I can't swear that there weren't also business drivers behind the decision (in fact, I'm pretty confident there were). But I can say that we in R&D were very, very sincere in our belief that the 3.5 edition was necessary and was being done for all the right reasons for the game.
Around this same time, you saw WotC beginning to publish adventure modules again (which Dancey's plan had specifically eschewed).
Again, a conflation of the facts. First, Ryan's plan did
not specifically eschew adventures; at least ten were published on the product schedule he developed. More generally, the strategy
did identify adventures as the sort of lower-volume, lower-margin products that were likely to be widely supported by the OGL, and hence less likely to be profitable for WotC.
Secondly, WotC's return to adventures did
not occur "around the same time" as 3.5, but about two years later (2005ish), under my watch. The reason had nothing to do with abandoning the precepts of Ryan's strategy, but simply to address a strategic need for a type of product that had all but disappeared from the marketplace. With the OGL failing to produce adventures and little competition in the category, adventures could generate enough profit to make them worthwhile. And, as I said, they were strategically important--all the rules in the world don't matter if there's nothing for people to play.