Q: "I read a lot of posts here and elsewhere, and the general "edition war" boils down to 1e vs. 3e.
Where's the second edition love?"
Where indeed. :\
It just goes to show you, although it was assumed the switch to 2E by TSR (from 1E) was a good business decision (this switch actually started with DL during the late 1E period), it turns out it both sunk the company, and its players speak of it in past tense, and unlike 1E seems to be pretty much a dead system. That said 2E did make TSR alot of money quickly (it just couldn't keep up long term). One can only wonder what would have happened if Gary had kept control of TSR. If the model continued to be: support 1E with new modules, but create new role playing games for all the other genres and focus on capturing control of those markets. Instead, 2E pushed most players out of D&D and into other game systems (less hokey and story based).
I think 2E was a fad. It was the pumping out of tons of untested romance novel style modules that only appealed to a small percentage of the original D&D players. Although this effectively shrunk the number of D&D players, it drastically increased sales (because those that were left were prone to buying anything released by TSR). But the problem with this strategy was that 2E was fad based, and it was nec. to constantly invent new things to keep people buying. Eventually this pool of players grew too small to support the company. Whats going on with 3E is somewhat similar IMO. Once again WOTC is finding itself pumping out new material to a smaller percentage of players but one which buys anything official without much question (you know who you are

). This increases sales but shrinks the base of players (who don't care for the increased complexity and flooding of new material). Eventually there won't be enough people playing 3E anymore to buy their new support material. Once that critical mass is hit they'll release 4E and continue with this same 2E model.
The 2 competing models are: slow and steady (early 1E) with lower profit goals, and fast and irregular (late 1E through 2E) make alot of money before the market crashes. As it turns out, 2Es model was the one that proved best suited for the market. This will be esp. true now with the numbers of competing games floating around, and having to compete with online computer role playing games (novel by definition).
Its the lightbulb burning bright and fast with a short life vs. the Thomas Edison dim bulbs still going after all this time.