As someone who was collecting even back in the day, the 1701 debacle irked me, and I still sort of resent it as the straw that broke the camel's back. I'd have gone with option #6, maybe option #4 above, as I think that would have nipped this in the bud before it ever began to get out of control. Limited edition packaging would have been far less offensive than limited edition figures.
As for The Sisko's limited edition figure, I think the real reason there was no backlash can be summed up with my reaction to reading the first post in this thread: "There was a limited edition Sisko figure?" I'd have totally mailed away for that if I'd known at the time, but the simple fact is that this is the first I'm hearing of it. The 1701 figures were much more well publicized, which may have been to their detriment. There's another factor in play here though, which is that DS9 wasn't exactly popular in 1994. Remember, in its second season, DS9 was almost universally hated by the majority of Trek fans as "the un–Trek like series that Roddenberry would have never signed off on," and Sisko was still just a "Commander," rather than a Captain, and not nearly as beloved as he was about to become. I really went from watching DS9 because it was Trek to genuinely enjoying it with The Jem'Hadar, but that was the second season's finale if I remember correctly, and it was definitely after the Sisko figure would have been on anyone's long range sensors. Keeping that in mind, it's also worth pointing out that collectors were a bit more selective in the way they categorized things in 1996 than they are in 2019, at least when it comes to Trek. You were far more likely to find a TNG or a TOS collector than a "Star Trek" collector, and it was really only with VGR that the franchise as a whole began to have all–around collectors, primarily as it had given the franchise a fourth live–action installment, and DS9 was starting to actually have a bit of a following around the time of VGR's premiere as well.
Now let's look at the infamous 1701 figures: The ones that were actually released in the 1701 quantity were the Tapestry Picard and the Yesterday's Enterprise Natasha Yar. Unlike the Sisko figure that no one seemed to know about, these weren't just characters from a then–unpopular series, they were characters from the most popular Trek series, (at the time that was TNG,) and not only the most popular series at the time, but two of the show's most popular, fan–favorite episodes ever. The only way this could have been made into a bigger one–finger salute to collectors would have been if there was another figure produced in the 1701 quantity from The Best of Both Worlds or The Inner Light. These particular characters, combined with the well–publicized limited nature of this release effectively ensured that there was going to be a backlash. This was not helped by the fact that so few people had internet access as this point, (remember, eBay launched in 1996 if I'm remembering correctly,) and that one group that was likely to have said internet access was scalpers who knew how to get these figures into their hands before eventually getting them into yours.
Did the 1701 line single–handedly kill the Playmates Trek line? No, but it did somewhere between 50% to 75% of the damage. The First Contact Enterprise–E didn't help the ship line, and while Voyager was awesome, it was nearly impossible to find. (It still goes for stupid money and will continue to do so until DST releases one, hopefully after the "C" and the Reliant.) The figure line was killed with the addition of other forms of incompetence though. Much like the disappointing Enterprise–E, the figures from my favorite Trek film were a little stiff, lacking any joint articulation, and in the wrong scale to boot. I wanted First Contact figures, I just didn't want ones that couldn't be used with my Enterprise–D bridge playset or TNG figures. The Target exclusives were the final nail in the coffin for me. At the time there was no Target near me, (one was literally being built while the figures were available and the next closest one was two hours away in a densely populated state,) and by the time one opened, the figures were long gone.
I don't really like that DST still does exclusives for SDCC, especially not now that they're ships, which I care about even more than figures, but at least to their credit most of them are void of electronics and the rest are really unique repaints. (I'm not happy that I don't have the "cloaked" Klingon BoP, and I'm fuming that I was never able to get the gold 1701–A, as I thought I'd be the only person who wanted one, but at least they're not entirely unique ships that could torpedo the entire line.)
Gothneo, I'd like for "chase" figures to be dead, it seems like we're getting there, especially with Trek, but there still seem to be a few in other lines. I don't know how Hasbro will handled Power Rangers now that they have it, but one thing I hated with BanDai all the way up until the license went to Hasbro this year was the way they'd create "chase" figures unintentionally by severely short–packing certain characters, usually the female Rangers and any villain figures. (At least their convention exclusives tended to be extremely niche to the point where they wouldn't anger fans who couldn't attend, although that was done well enough by not having enough figures for a decent quantity of people to buy a complete team in one go.) I'd actually say it was early–mid 2000s anger from collectors that got toy companies to begin rethinking how they handled exclusives. The 1701 debacle was fresh enough in the minds of Play Along's Art Asylum that when they did exclusives, they tried to make them available in a quantity that wouldn't offend people, and DST seems to have continued that tradition. Other toy companies felt similar backlashes for similar missteps, and the same scalpers who flipped the 1701 figures had now found a global market through eBay, making their work even easier. The difference was that eBay opened that market up to non–scalpers as well, which meant that if you really wanted to help eliminate the traditional scalpers, you and a few friends could buy up exclusives like the traditional scalpers would and then just undercut them enough to drive their prices down until everyone was offering things at a reasonable price. Double or triple retail value is fairly common now, but you're not seeing 8-10 times the retail value the way you might have seen back in the day. (And I could make an argument for double or triple retail value being somewhat fair, with the existence of exclusives that appeal to the masses and not just a really niche group being the main problem.)
The bottom line is that the 1701 debacle didn't kill the Playmates line by itself, but it did enough damage that a few other stupid missteps like removing articulation, messing with the scale, and phoning in the Enterprise–E all sort of ensured that the line failed. It didn't help that Playmates got greedy either and yanked the license from Galoob for Micro Machines. I really loved those and back when Hasbro had a Trek license in 2012 I'd hoped they'd have made a comeback, which they didn't. (The Star Wars ones did though, so at least I still have those.) Once those were gone though and Playmates made it impossible for me to find figures that had any articulation without contorting myself into a pretzel to get them I didn't really stop wanting to collect so much as I ran out of stuff to collect that I could find. I think that kind of mistake is what killed the Playmates line, and that the 1701 figures were part of it.
Of course, in hindsight this doesn't seem too bad to me, because the stuff from Art Asylum/DST has really made me even happier with my collection, especially when it comes to the ships. We wouldn't have that if Playmates still had the license, especially if their 2009 offerings are any indication of what a modern Playmates toys line would look like. (At least they tried to do another bridge playset though, even if it didn't work out. I give them a lot of credit for that. The rest of the 2009 line, not so much.)