I'd have to say that there is much validity in your statments, CygnusXII. I work as an A+ tech, and see many of these bogged down registries every single day. It's also very much an issue, these days anyhow, with tons of spy/adware programs on users systems, that they don't even realise are there. I mean, it couldn't possibly be those "tons of free cursor" programs, or "web(cough)shots" and such... right?

The simple fact is, the vast majority of home PC users simply do not know how to maintain their system for top performance. They don't understand the importance of maintaining a clean registry, sweeping their system for spyware/virii, or running cleanups on their temp files and defrag of the HDD. They see something that they think is a neat program, for "free", and blindly install it. (What? Free cursors? All I have to do is "click here"??... while CursorXP gives you any and all cursors you could want, or make, without the spyware...)
Also, many home PC users think that an install of Windows should last forever, without ever having to reinstall it. I've seen people bring in systems with Win98 first edition (we refuse to work on 95 machines these days), that have been installed since the day that they purchased it. As a general rule, a format and reinstall of Windows once a year is a good practice. No matter how good of a job you do cleaning up your registry, it's bound to get "wiggy" sooner or later. If Windows was an OS designed to be installed, and forgotten about... we'd never need to buy a new version of it.
Finally, the issue about memory, and it's availability these days. Most mass PC manufacturers are putting at least 512MB in a system these days... and that's DDR. We're talking a minimum of what USED to be the maximum, and at speeds at least double what it used to run at. Add to that the fact that the average user has 1GB or more (hardcore users, those that would be interested in running something like WB), and this is no longer even a valid topic. (Even with WB and Objectdock, NAV, and a few other programs running, I still have over 75% of my memory available... with 1GB installed.)
Granted, I just recently got into WB/Object Desktop, as I'm sick and tired of Windows being so boring... and I'm getting interested in creating my own skins... but, I can't see where this program could ever have been the "memory hog" that it's claimed to have been.