I think it could have retained a lot more people than it lost. It took them forever just to add a basic tutorial, for one, and a lot of updates that were added later could have been used at ps2 launch, like the outpost warp system. Not losing exp during COP fights alone without any of the nerfs would have saved so many people's sanity. FFXI has a lot of players, but it also had a lot of churn.

The game really needed the wider audience much earlier. The changes I think are designed not to engage new people, but to make the game less of a pain in the ass for those that remained.

As for the changes, reading up on it looks like you can reserve a NPC minister for basic ones, and apply for server time to place objects to make a more immersive experience. Not too sure about the latter, I see a pretty big backlog for that since it has to be labor intensive to allow players to modify the ingame environment, especially in non-instanced areas like Purgonono isle.