Well… I dont agree with your reasoning completely, but in actuality there is a good point in there.
Borrowed power wasnt covering up the pillars of the game that are old. They were just systems designed to generate more MAUs. Or monthly active users. You had to log in, if even just for a little bit, each day to keep up on your char. Then each expansion, they built a new player power system, that you had to do a little upkeep on almost every day. Players got tired of this.
I think there are two main factors. The first is that the game is a 20 year old game. The pillars of the game have largely been the same. Instanced PVE Dungeons. Instanced PvE raids. Instanced PvP. They have iterated on them, well PvE, Sorry PvP, but they still have the limitations of the game engine and the core design of the game. And again, the game is 20 years old. People age out.
Now with DF, they removed a lot of the tedious daily grind stuff. So their players are logging in to do what they want, then logging off. They are skipping days here and there. And they are trying other games. Currently I like it much better that I can skip a couple days during the week, and not feel like I am behind on anything. The raid loggers are raid logging. The M+ players are doing their M+. And the PvP players are doing the same BGs and Arenas they have been for a decade. But they dont have to do an hour or 2 of chores every day, just to keep up in order to do what they want to do.
The second big thing was the One-Two Punch of BfA into Shadowlands. BfA launched with so many unfinished features and systems. A lot of what was there felt half hearted. And Azerite gear was HORRIBLE at the start (And pretty much completely horrible). There was the AP grind. And the expansion features, Island Expeditions, Warfronts ect, were just not completed. They all felt lacking. And on top of that, they spent every patch of the expansion, adding a new borrowed power grind, to try to fix the previous broken borrowed power grind. It just felt too forced.
Then came Shadowlands. Shadowlands felt like it was actively fighting against you from playing and enjoying the game. The covenant locking, the soulbind locking, the gated campaign. Wildly imbalanced covenant abilities and soulbinds. Conduit Energy, which basically locked in your soulbind choice. The game basically spec locked you on your class. And in most cases having players choose between an ability that performed well and an aesthetically and thematically unappealing covenant, or a cosmetically appealing covenant and an ability they did not want. On top of this, you had the Maw, which actively limited how long you could play in it, on top of having to walk everywhere. Torghast, which was fun for some specs, but others struggled. Some had fun powers, others had stinkers. But everyone had to grind it. To make legendary items. Which, if you didnt have the correct legendary, it largely made your class incomplete.
I can go on and on about the story and systems in Shadowlands, but my feelings are clear. The expansion punished you just for playing it. And they rolled back these arbitrary limitations too slowly through the course of the expansion. Till finally just admitted that yes, locking players into forced choices, was not meaningful choice. It was just forced decisions.
Additionally, they will not admit it, but they did cut a patch from Shadowlands, and sandwich two raids together in Sepulcher. There is too much evidence to the contrary that Sepulcher was going to finish with Anduin, then there was going to be another patch and raid for Jailer. I would guess this decision happened early in Shadowlands. Sepulcher feels like a cohesive raid up to Anduin. Then you port to a raid that looks very different, with three bosses, that are very different from the previous ones. And there is that unused portal spot at the top of Oribos. Just sitting there empty.
Those two expansions really soured a lot of the players. And while DF is a good expansion, it isnt really enough to win those players back. Some may be back to pop in, check things out, then leave. Or pop in, clear the raid, run a few dungeons. They arent hanging out.
D4 is a factor. A lot of people are playing it. Additionally, we are in summer, which sees the players slump a bit. Not to mention, we are in a Summer, where most Covid related restrictions are lifted. Last summer, there were far fewer summer camps, and summer activities. There was still a lot more work from home. Fewer concerts, festivals, gatherings, vacations, travel ect. So we are seeing more of the normal Summer Slump than we have for the past 2/3 years.