I have no issues with people doing gigs as long as they like as long as they're having fun doing it and the audience appreciates what they see/hear. Some of Picasso's best work was done shortly before his death - music isn't sports. And if you can't hit the high notes anymore, change the key, so what.
The way The Who's music has changed since first Moon and then Entwistle died, sometimes makes me wonder to how committed Townshend and Daltrey were to having such a rambunctious rhythm section in the first place. My impression is they had outgrown it and wanted everything 'neater' - both Daltrey's and Townshend's solo albums have run of the mill, subdued rhythm sections.
I think you're right. We see how that played out. Townshend did a lot of damning-with-faint-praise of his bandmates. He was the driving force behind hiring Kenney Jones, who was great in the Faces but never quite fit in playing the old material live. If Roger can be believed, he thought Moon was a genius and hated Kenney Jones, but was overruled by Townshend.
Jones did a good (if not very fiery) job in the studio on the newer-style material, which I quite like some of but disappointed a lot of fans. I think Townshend was tired of the relentless cymbal-bashing and wanted someone steady. And while he expressed some admiration for Entwistle's sonic innovations, he possibly was tired of all that racket from stage right too.