Digg was at its best, IMO, when it focused only on the tech industry. Now that I can specify whose news I want to follow, I think any Digg user can create a niche Digg experience that harkens bark to that first version.
People are undervaluing what Digg is doing here - it's creating what I think is the best RSS reader available. Rather than subscribing to Mashable's RSS, TechCrunch's RSS and RWW's RSS, I have friends with similar taste adding content to "MY NEWS." Each one of these stories is something interesting enough to merit submission, whereas in a traditional RSS reader 1/10 of the TechCrunch posts would be one of those "Jason Calacanis: the Attention Whore" type of posts that Arrington publishes.
In short, Digg doesn't need power users, and its redesign is going to bring a lot of users back who liked the tech-centric Digg of old.