You raise some very strong points there.
I especially liked the point on if the eCommerce site is in a niche area that not that much can be written about, then it should be easier to dominate that niche by producing all that content the niche requires.
I guess Google has finally caught up with the manual link tactics many eCommerce sites have been deploying for a long time. And by manual link tactics, I mean them actively going out there and building links on free properties (web 2.0 profiles ect) and so on.
And I agree with you on the fact that content has become the cost of doing business.
A final point one your last comment above, I feel the reason why many eCommerce sites feel they have no real other choice other than PPC, is due to the fact that although PPC costs, it provides them with the predictable traffic they need and is more metrics driven - which I suppose appeals to eCommerce site owners whos primary goal is conversions, whereas producing content plays on the need to be more creative and strategic, so may not appeal to many of them quite so much.
But you also addressed this issue , by saying that they could very much hire the best bloggers they can, assuming they are an eCommerce site with the financial resources to do so. For the eCommerce sites that do not have the financial resources to have link worthy content produced, to them the companies/individuals that are offering hands off manual automatic link building campaigns, are still very attractive.