Peter did have some good business sense but then he left the company and Valterra was put in charge of D&D. Valterra as part of WotC/Hasbro also made bad decisions. The point once again was showing a past history of both TSR and WotC making bad decisions to help prove the point that just because someone owns D&D doesn't mean they are making the best decisions about it.
I suppose this is the crux of your point, but then this just misses the point of what I said earlier. I didn't specifically spell out that the people in charge should have good business sense AND be gamers because I thought the collective intelligence could understand my meaning without having to spell it out. I was wrong. Spelling it out now. Here is a good business model for an RPG company:
1) Having employees who have good business sense.
2) Those same employees loving RPG's and D&D in particular.
Those are not mutually exclusive. My point, conversely to your own, was only that just because they love the game does not mean they're going to make bad business decisions through choosing the game over the business. The fact is, they made a lot of really good and valuable changes to the game, to the license, and to their online awareness that had the potential for revitalizing the game and the industry. But it was all poorly executed.
They went through tons of trouble making D&D conform to the changes requested by the D&D community, as well as conforming the GSL to those requests. However, instead of finding a business-savvy means of converting old players to the new game, they gave reasons to people why they shouldn't convert to the new system.
From my study of the new rules, I see a lot of places where they returned to the old rules, a lot of places that aren't actually as drastic of changes as people are screaming about, and some places where drastic changes were needed and made. The presentation was spartan in comparison to 3.5, and I suspect that had a lot to do with people's rejection. In time, though, all that will be reversed as people begin to change their minds with experience. So it's not the system, it's the execution of presenting the new system.
That's the problem with all the decisions over the last year and a half. With the GSL, it's the hard-nosed lawyer-ific parts that have turned the publishers off, and that can only be remedied through rewrite. Gleemax was a good idea, but was executed horribly. So the decision to follow through with Gleemax could have been a good one, business-wise, but poor execution can ruin the best ideas. DDI is a great idea, but poor planning has lead to its costly belated start. It's not the decisions to take on those projects that was bad business. It was the execution of those projects in a way that was both costly and rushed.
At the core of all of that, I firmly believe, is their persistent lack of carefully calculating the time it takes to get one of their projects out the door. Time is money, and if you are persistently late on the completion of all your projects, you will persistently hemorrhage money, especially when you're making sky-high promises.
D&D 4e's execution is due to a poorly thought out execution (likely due to too tight a release schedule), but for Gleemax, DDI, and the GSL, time ran out each time, and each time they have presented a too poorly executed product. I can see where time approvals and taking on too many projects at one time could be a mistake that traces back to the company president, but the ideas themselves were solid business decisions. So I'm not seeing WOTC fall down in the vision of what it wants to do, but it falls down repeatedly in the execution of that vision.
I seriously doubt that a single case against a single company's copyright violation cost them tons of money unless they dragged it out forever. And I'm firmly confident that the Lorraine Williams scenario is not happening to WOTC. Bad business decisions running the company into the ground I can see. Frivolous lawsuits, pushing out product after product that no one wants, firing the most valuable employees to push a single person's agenda, and ignoring anyone outside the company that has input, is not something I see WOTC doing. They are way beyond that stage of development corporate-wise.