I think that's a bit harsh! Subaru has been diluting the Impreza range for years now. Once they quit rallying, it was only a matter of time.
Fair point, although I loved the hatch and I'd happily have a WRX Sti tomorrow. The lower models though (especially the boxer diesel) were weak, I'd hardly call the WRX, WRX Sti, and CS400 soft.
I suppose you could say that the BMW M135i costing the same/less than an STI hatch was the nail in the coffin though.
Edit: Part of me (a very small part) is glad they finished Rally just to stop chavs and morons plastering everything with a Subaru badge in knock off 555 graphics. I'm already dreading the day I see a BRZ with them on...