I'm not sure what downturn you've seen since ethereums devcon this year had over 700 participants attending despite being in China, and there is another conference next month this time in europe, so if anything it keeps growing.
The DAO was too much, too soon. you say "they" which I'm not sure who you mean, but please note that ppl behind the DAO are not the same as the Ethereum foundation, consensys, reuters, deloitte, santander, etc.. let's not conflate one group and their mistakes with the entire Ethereum comunity.
As for oracles, they are an interesting problem to solve. Note that not every project would necessary require outside interaction (such as a decentralized DNS), sometimes there are creative solutiosn to do certain things externally (http://www.ethereum-computation-market.com/), and there are ways to verify the validity of the data a oracle is providing, as an example you can watch this talk https://www.youtube.com/watch?v=9pDUobV8geI