I think another problem is that games in general became more and more complex over the years. Creating an interesting level for SMW isn't that complicated to do (of course to do a great one still requires tremendous effort). Now move up one generation and we have SM 64. Creating a new level for that is several times more difficult from a design point of view (let's not even get into the technical problems here!). With texture packs we got lots of crappy and ugly texture replacements, oh great. But making a complete hack so it can be called a new adventure (that's what I consider a complete hack, and most of the staff agrees which is why we don't accept simple graphic hacks to the site) is vastly more difficult. Most hackers can create rough drafts of SM1 levels in 20 minutes. I remember when I created a level for Unreal Tournament, it took me weeks. And that was only one little level for 8 players or so. And it's a multiplayer game, if you create Single Player stuff you'll have to consider enemy placement, scripting and the like too. This is also why in the PC modding scene there are so much more Multiplayer Mods than SP Mods.

It seems pretty simple to me. The games you mentioned are frequently hacked because of how easy it is to do thanks to the editors, utilities, and information floating around. There's so many tools and information for Super Mario World, you can circle around the Monopoly board all the way the Pennsylvania Avenue in one turn rather than having to start at square one on Mediterranean Avenue. It's just an attractive, easy, quick, shortcut option to those interested in ROM hacking as opposed to starting on some new game and having to figure it all out and build your own utilities which could potentially take months or even years. Instead, download a few documents, and Lunar Magic, and you're on your way.

The second reason is quite simply raising the bar and doing it 'better'. There could be 100 hacks of the same game, but someone will come along and build upon the available information and utilities and create something 'better'. They will have the game like nobody else before them. People are still hacking Super Mario Brothers 1 for the NES. However, the hacks today are better than than most of the ones that have come before them. It's all about deciding you can do something better and raise the bar. Maybe you can't, but you think you can and give it a shot.

As for the ROMhacking community dying. I mostly agree with Neil. It's been supposedly dying for years and years. Instead, what has occurred? Something always pops up to spice things and gather people of the community back together again. Perhaps similar to ROMhacking.net. I also think many including perhaps myself sometimes mistake 'dying' for 'separation'. It seems there's always ROM hacking going on somewhere, but without a central site or other means, you just don't know about any of it. There's still things going on what we don't know about even with the site. ROM hacking lends itself to be an independent activity. So it's easy for lots of things to be independently going on with no knowledge of the other.

At present time, I'd say the ROM hacking community is about as alive as I've seen it in a good many years. I don't see any danger of that dying off anytime soon. Popular interests shift over time as newer, younger, people join in, but just as always new, talented people sprout up often. Getting into ROM hacking is easier than it ever has been with all the tools and resources available today. And just like the mid 90's, for every 1 talented person that sprouts up, there will be tens of people who fail, jump in over their head, or just annoy others asking to be spoon fed. That's the nature of the beast.