Well, I think the automobile market is a bit different than the motorcycle market. I actually think there would be fair amount of people who would buy a competitive American sportbike (if priced somewhat competitively), simply because there hasn't really been one. Now, given the apparent bias towards H-D in the sportbike world, I'm not sure if they'd buy a Buell.
But, in general, I agree with you. I don't see the problem as sales so much but the cost of ongoing development. And it doesn't fit H-D's long held strategy. If Buell/H-D was to enter the sportbike wars in earnest, could they sell enough bikes and make enough profit to make the whole thing worthwhile by their standards? Would it be worth if from an image standpoint?
Buell is better off staying in their "alternative sportbike" niche. That doesn't exclude development of a new engine, but they should stay away from direct competition with the race rep crowd. I've no doubt that the initial development money for a new motor is chump change to them, but they are in a very successful business, so the question is cost/benefit (and I'm sure they would want any development to benefit H-D branded bikes in some way, which isn't too likely.) Only the product planners at H-D have a clue as to whether it's worth it. My guess is also that they think the answer is no, at least for now.
But it is clear that the XB line is being stretched a bit thin. Changing handlebars and seats, adding hand guards and calling it a new model isn't really going to cut it. From what I understand, Buell isn't exactly raking in profits.