I don't believe that model engineering is dying out, it is changing. Some may think for the worse, some may not.
I know many younger people, mind you I'm nearly 65 so to me 'younger' carries a wide spectrum of ages, who are becoming interested in workshop activities, though they are not necessarily interested in making a steam based project.
My eldest son, now thirty, has become increasingly interested in workshop based, practical activities, though in his case he is interested in eventually building a traction engine. Mind you he works long hours and he has a young baby son so his spare time is limited, as was mine when I was his age.
Possibly model engineering should be 'renamed' amateur and model engineering (I hesitate to use the term miniature engineering on this website). 
The internet is affecting model engineering as it is affecting every aspect of life. People are ordering materials etc. via the internet they are not reliant on waiting until they can get to an exhibition. We are seeing this reflected in the number of suppliers who now attend exhibitions, the disruption to their business (in terms of time away from base, not just exhibiting but the days preparing, travelling and then returning things to stock after the exhibition) and the subsequent delays on internet order processing is causing some to make the decision not to attend. Of course the cost of an exhibition stand are also part of the calculation.
There is much excellent internet content, though their is also a lot of dross mind. 
The clickspring site is, at least to me an, example of an excellent site with good content and with good clear explanations. It is not model engineering but it is amateur clockmaker/small scale machine building. Check out the content on the replica Antikythera mechanism. Check out his workshop made tools etc..
As I say the hobby is changing, change happens, that's life.
Trefor