It might be interesting to look at the success that Midwest Express is having. They fly DC9s and MD80s in all-business-class configurations (2 and 2) with leather seats and first class meals. Their hub is Milwaukee where they've become the dominant carrier. ME flyes to major cities across the country but they all connect in Milwaukee or Omaha.

I think they were smart to carve out a niche and not try to be all things to all people.