I think they killed and Buried AD&D and the D&D system as it was known and replaced it with the D20/Pathfinder system that we now know.
Frankly, this bit sounds kind of like edition warring, suggesting that the d20 system isn't "true" D&D.
As to the rest of the post, if I recall correctly, it would have been much cheaper for WotC or another company to sit and wait for TSR to have been dismantled and then acquire the license. WotC didn't want to wait that long and paid a lot more than they needed to, if what I've heard is correct.
Without WotC around, it's pretty likely that D&D would have been dead at least for a period of years. The impact on the RPG industry would likely have been significant as a result. Whether it eventually came back or not would have depended on whether tabletop RPGs were even considered viable by then.
Whether or not D&D eventually came back, I'm pretty sure that AD&D as a separate game would have remained dead barring legal issues. D&D has massive market penetration even to those without any knowledge of RPGs, but the same can't be said for AD&D, which runs the risk of confusing newcomers. (It got even more confusing in the mid- to late-90s, when there was an Advanced D&D but not any basic D&D to speak of.) Whatever company picked up D&D would likely have done the same thing WotC did and unify the brand.
As to another company picking up D&D, that might have happened. But it's just as likely that the other company might have decided that D&D was more profitable as something other than an RPG. Without WotC around, D&D might now only exist as a board game or a series of computer games.
Bottom line: D&D was dead before WotC came and revived it. They also made the OGL, which has allowed support for every edition to thrive. Even if another company had picked up D&D and brought it back as an RPG, the odds of them introducing something like the OGL were very slim.