Actually, there are cases in other countries trying to force Steam to allow selling of used games.
That said, by your description here, the family sharing would have just been a restricted version of the current ability one has to simply lend the disc.
I don't think this is a stuck in nostalgia thing, although I agree that's a problem and know firsthand about Vanilla WoW players (even though I count as one. Got into the game when a friend treated me to a trip to the 2005 Blizzcon). I think this is a company attempting to screw over its playerbase and the playerbase not taking any more. Were "Online Passes" also somehow good for gamers?
All that said, if XBLA ever offered the type and frequency of sales seen on Steam, then the idea MIGHT have worked (although, again, there are people who prefer the way console games are marketed instead of wanting it to become like PC, and I disagree that the used game market is ever going away), but there was no indication of that. Microsoft even briefly had the Steam-esque Games For Windows Live service, and didn't have Steam like sales (neither does Origin sadly, although I do like their On The House program.)