I can think of one serious advantage to four thirds at this moment: The lenses. Who cares about the bodies? They're just going to be replaced. Most don't have any need for more than 10mp, myself included, and those who do are even more of a "niche market" than the market for 4/3 consumer slrs. The lenses, however, consistently score as best-in-class, and as far as the "small range of often expensive lenses" goes, it covers everything from 14mm to 1200mm equivalent, and there are very well-built, high-performing, and yet inexpensive lenses to cover most of that for those who don't want to pay a lot.
Other makers like Canon and Nikon have more lenses available, but many of them do the exact same thing, such as an updated version of an old lens, or a manual focus version and an AF version, or several lenses covering only marginally different ranges and aperture ranges. I'm sure that after 4/3 has been around for as long as, say, EOS mount, it will have just as many outdated, redundant lenses to choose from alongside its better lenses of the future.
As for people "voting with their feet" against 4/3, it's interesting to note that Olympus has increased sales, and there were quite a few people who switched to Olympus with the E-3 announcement. Of course, there are always people who switch systems for a new camera, but if it was all bad over here, there wouldn't have been nearly as many... hardly suggests the system is fizzling out.
The comparison of 4/3 current position to that of APS film back in the day seems a little erroneous as well; with APS film, you had several different brands trying to sell poorly designed products to be used with a more expensive film format, alongside their more established, superior 35mm products. You didn't get outstanding lenses thrown into the mix, you didn't get less expensive cameras, and you certainly didn't get image quality comparable to even the cheapest current Olympus DLSR. It was a really bad set of circumstances for APS. 4/3 has it quite a bit better, and they're doing quite well for it.
Always a niche? Possibly. Dead? I don't think so.