I think you might be right about the popularity. Major commercial MMOs are deriving revenue from either subscriptions or microtransactions, with the latter becoming much more common (and requiring a far larger userbase to maintain profitability). The trend toward "bland but flashy 3D" has been around for a long time now, so it makes sense in my mind.
About ~ 15 years ago there were quite a few 2D MMO engines freely available, mostly written in VB6. The two big ones were ORE (a very basic FOSS project that didn't support much beyond logging in and walking around) and the Mirage family of engines (closed source, but was licensed and forked quite a few times, most notably into the Playerworlds engine). The various Mirage engines, especially Playerworlds, really lowered the barrier to creating MMOs, and consequently there were quite a few indie "MMOs" with userbases of ~ 50 - 100 regular players.
I know of at least one other FOSS engine project out there (Lunar Engine, which is much further along than my own) besides mine. My hope is that if a few easy-to-use engines are made available and promoted well, another community will form around these 2D indie MMOs. So we'll see what happens.