ok, yes I get that in today's market, the crop sensors are less expensive, and that it is cheaper to produce many, smaller sensors (more revenue from the same silicon substrate). for that reason I don't see the crops going away soon.
but the advantages of the smaller sensors (reach) are (currently at least) overshadowed by the consequences of pixel density -- large sensors put more pixels on the image with lower pixel density, which is why the IQ is higher. captain obvious at your service :-)
The extra reach isn't a result of the smaller sensor, but of the higher pixel density.
As example, There's no difference between taking a photo with a 5Dmk2 & cropping to 40% and taking the photo with a 20D (the rest being equal, including the lens), as 40% of the 5Dmk2's 21.1MP is almost identical to the 20D's 8.25MP.
The benefit of crop factor is in price, both for the body and [up to certain focal lengthes] lenses smaller image circle.