i wasnt suggesting that wotc ever develop anything new for any ruleset or system other than 4e. all i suggested is that they republish in paper non electronic format the core rulebooks of al prior editions. let the 3pp's develop new stuff. or license a 3pp to reprint the core rules, paying wotc royalties. then allow others to develop for it under the ogl. who knows, some killer supplement might drive sales of the core rulesets of older editions and make wotc money even more money. as it stands now, wotc sits on IP that doesnt sell, and thus doesnt make them money. my ideas use their IP to make them money at little or no cost to them
the "fractured market so we all lose money" scenario doesnt fly with me. in a sense what i am suggesting is the same as expanding the ogl to everything ever made by wotc and tsr. the ogl made money for all involved and grew the market for 3.0 and 3.5 why wouldnt it do the same for prior editions? and if wotc licenses the republishing rights for a flat fee or a share of the royalties, no sweat off their back. they have free money in the bank for doing nothing essentially.
tsr lost money not because they supported 2 editions. they lost money because they put out crap products and made bad bad financial decisions. see the overview here:
http://oracle.wizards.com/scripts/wa.exe?A2=ind0003c&L=dnd-l&D=1&F=&S=&P=9724
if someone competes against himself, who wins?
I think D&D brand would lose power. For example if they would like to license D&D for a video game, under your scenario, it would sell to a smaller base than in the case of how they are handling it right now.