Actually AF do use widebodies on CDG-NCE a few times a year (typically the weekend which has both the Cannes Festival award ceremony and Monaco grand prix which is typically the busiest at NCE). It's often a 777 or two, occasionally even a 744 and I hope it will be an A380 sooner or later!

For the rest, as you outlined, cost savings are limited for this length of route and dense schedule is considered a plus. The choice is not 3x A320 or 2x A330 as the latter would be more seats, but the problem with AF is that it sacrifices the advantages of the density by having exactly the same change rules on La Navette flights as it has on any other flight. Compare to IB's punto aereo whereby passengers can/could arrive at the airport at any time with their ticket and without reservation and just jump on the first plane that had seats. Brilliant. Then, having a flight every 15 minutes at peak time does mean something, but on AF, get a non-changeable MiNi fare and you don't give a **** that AF have three other flights within an hour as you can't take them anyway, and in that case, AF's denser schedule presents absolutely no advantage over U2's sparser one for most passengers (the only exception being the few travelling full fare.

But hey, as you say, I would quite like AF to use those widebodies on CDG-NCE in particular (which actually has extremely busy flights in the morning and less of a 'schedule density' argument) and BA to put the 763 back on LHR-NCE (but they offer up to 12 flights a day in each direction between London and Nice so again they chose density and in away it works in my favour).

Also just to echo brunos's original point - it is true that HKG-TPE is ultra dense but what he describes is simply a more general strategy of Asian airlines: they use widebodies on such routes as BKK-SIN which is also just two hours even if they only offer a few each day. Not an absurd choice in my view.