You're right of course, and that was something i had taken note of but forgot to actually mention. Dominic is consent issues personified, of course, and even if he can't literally leverage his powers to coerce consent against women he genuinely likes, that still leaves the rest of the population. Like, for instance, his wife. I strongly suspect that's the real reason he's being written out. And to be honest, I don't really mind. I like Dementlieu as a setting a lot, but d'Honaire is one of the less interesting things about it. Mind you, new Dementlieu sounds like it's going to share little with old Dementlieu other than the name, so we'll just have to wait and see at this point. I just hope not too much baby gets thrown out with the bathwater.
The problem is there isn't even much bathwater. Without Dominic, its just 18th century France. As you pointed out, there isn't really anything special or supernatural about the domain. Beyond Dominic's mind-control (and his brainy rival), Dementileu is fairly free of horrors. At least the Gazetteer tried to fill in the blank space with some pre-Revolutionary War class tensions, but even that is kinda flat in a setting where you know Dominic is always* going to succeed because its HIS domain. And even then, any attempt to revolutionize would probably be cut short the minute Dominic learns about it; it only would take a couple "sessions" with Dominic to "convince" the leaders that they were wrong and they should tell thier followers to call off the Bastille-storming.
Extra weird because he canonically has a son. Maybe it's his wife? I would guess they're completely rewriting the domain with no similarity to the original.
The Beast sounds a bit more like Richemulot, but the Man in the Iron Mask would be a great Dementlieu plot. Perhaps an odem or fiend trapped in a mortal body. It can't be exorcised, and killing the body would release it. The Mask traps it in the body so it can't possess anyone else, and anyone it possesses would be a great threat to Dominic.
I don't really think the authors where thinking about "how are player characters going to interact with this".
There are three types of domains in Ravenloft: the domains that are their darklord and nothing else (Keening, Forlorn), the domains that the darklords are basically non-entities (Dementlieu, Mordent) and the domains that meet in the middle (Barovia, Darkon). I'm not a fan of either extreme, TBH. The darklord-focused domains like Keening are basically adventures told in a narrative rather than explorational format, and the darklord-lite domains like Dementlieu are good neutral space to tell your own stories in, but lack any hook on thier own. I feel Darkon is a good example of the middle: Azalin is always a potential threat, but the domain is so big you can do all sorts of things that don't directly involve him.
. Definitely Dominic D'Honaire didn't resonate with me, but it had nothing to do with his lack of combat prowess. I thought it was good that some domain lords were physically powerful and enduring, while others were more vulnerable. But D&D is not always about combat. Since 3E things have been highly structured around combat encounters building to a big final encounter, but back in 1E and 2E that really wasn't how the game was played in my experience. There was a whole approach where the goal was to play smart and avoid combat. And when combat did arise, didn't necessarily need to culminate in a big final encounter. With ravenloft in particular that wasn't a setting that was meant to be about fighting. It takes pains to paint itself as not having as much focus on that aspect of play (encounters happen for sure, but a lot of the effort is put into making counters atmospheric and building to a sense of horror). 
