Modern already has a much bigger cardpool than Extended. Modern goes back to Eighth Edition. Extended only goes back to Zendikar, which seems crazy, because Zendikar seems so recent, but time is weird like that. My guess is that players either want to keep playing with their cards, which Modern allows, or they want set rotations and a focus on the latest releases, which Standard emphasizes. The number of players that don't want to have their cardpool go back as far as Eighth Edition and also have some reason to be interested in a format that allows the latest four blocks instead of just the latest two (Standard) is no longer enough to save the format, apparently.
Also, your criticisms of Legacy are accurate and valid. I mean, it's still my format of choice, but I think most of us that got into Legacy did so because we thought of Vintage as inaccessible. As time goes on, the gap in accessibility between the two formats, for most players, becomes smaller relative to just how inaccessible they are. Legacy probably won't swallow up Vintage like Modern has swallowed up Extended, as Wizards of the Coast will want there to be some official format where their oldest, most broken cards can still be played. And anyway, players that want a different experience from the regular set rotations of Standard now have the choice between "Eternal" formats that require inordinate investments for slips of cardboard and a format where Dark Depths is apparently too degenerate to be allowed. Or I guess they could just avoid all that nonsense and play Commander. It's a weird, multifaceted problem, but I'm not offering any solutions: I'm just making fun of Modern!