Pathfinder only existed because Paiso existed, which existed because WotC CREATED IT, and gave it access to all their customers! (by handing Dragon publication to them).
While it is true that Paizo earned an audience this way, there were many publishers of varying nature and Paizo was hardly an obvious opponent. I still maintain that the reason Pathfinder exists is because of the GSL, not Paizo specifically: in a world where 4e was fully OGL and aggressively embraced 3PP and homebrew, Paizo could easily have made Pathfinder a 4e product, with its own distinct classes and rules structures meant to bring more of a 3e feel/approach.
But the GSL was written under the belief that 3PPs couldn't make it on their own. That WotC was indispensible. It wasn't, and thus Paizo took the easier route and cut out the middleman. Coupled with the disaffected, the Internet echo chamber that fuelled the edition war, and WotC's own bungling before and after launch, and you had the perfect environment for a customer base revolt.
4e did a lot of things wrong, mostly (though not exclusively) in presentation, marketing, the GSL, and the early adventures. Remove those things, and it would have already gone significantly better.
To your point about the digital tools team, yes, I recognize that some of their projects were...well, as you say, fanciful. The 3D character designer was frankly kind of silly unless they were intending to develop a full 3D-rendered tabletop program, which...I don't think they had the manpower to create in the first place. But there's a difference between "the pie in the sky stuff wouldn't have happened anyway" and "the digital tools basically collapsed because the team lead and
one of the other team members died in a horrible tragedy." Had that not occurred, it is entirely possible WotC could have become the first major VTT; remember, Roll20 didn't come on the scene until 2012.
And, like @MwaO
says, there's the morale issue. Even if the direct work-hour loss wasn't a huge deal, a murder-suicide among people you know, or at least people you've met
within the company, is going to cause a massive morale hit, and it isn't going to come back quickly. If you factor in the rise of Paizo, the edition war, and the slowly-dawning realization that they weren't going to meet the ambitious sales pitch they'd given the corporate overlords...yeah, I could see how morale might never have properly recovered.