In order to take advantage of the greater
port-density(-per-dollar) on FR switches right now, the
end user has to use FR, which is not always practical
or desirable.
This is actually not true, at least one popular brand
of FR switch has a builtin PPP FRAD (I must say that
debugging the connections is still a medium nightmare).
I agree with most of the other points you make, you do
miss one other potential reason for using FR/ATM technology:
competing in the VPN market with the old players there
(Sprint et al).
Simon