Interesting analysis, but I don't really agree with the premise that quad failed because most of the albums mixed were "second-tier" artists. While the case may be (and certainly is) that as many top-selling artists had quad albums released as didn't, labels were absolutely in the business of making music that sold, so they weren't commissioning quad mixes (which cost something in the neighborhood of $50k in today's money) as some kind of box-ticking exercise - no one was contractually obligated to issue a quad LP.
You certainly see some albums mixed for, and released in quad that were duds, but that's just the random nature of trying to sell any kind of art - if there was a simple (or even complicated) formula for commercial success in selling music, movies, or books you can bet that every company would employ it as they have no interest in sinking money into enterprises that don't merit it. The music industry back then was moving at a lightning pace, with pretty much every artist releasing an album a year (with some notable exceptions) and the albums that you do see released (again, with some exceptions where the few artists who had the power to exercise artistic control did so) represent what the labels saw as lottery tickets with the best chance for hitting the jackpot.
There's also historical revisionism at play, as the popularity of certain styles and genres waxes and wanes over the decades. I think for example, soft rock of the style that Bread and Seals and Crofts has fallen down because of its overly earnest style and lack of 'cool' cache, and rock fans seem to discount the importance of the acts that charted highly on the R&B charts (or "Top Soul LPs" as the Billboard chart was called back then) at the same time that rock acts were at the top of the Billboard Albums Chart, whereas bands like Black Sabbath, who were selling similar numbers of LPs as any of those bands back in the day have seen their profile rise in recent years because of the critical reappraisal of their historical significance and influence on younger generations.
Just a sample of some of the chart positions of recent rock and R&B Quadio releases:
Bread Baby I'm-a Want You - Billboard #3
Graham Central Station Self-Titled - R&B #20 (Can You Handle It #9 R&B single)
Bette Midler Divine Miss M - Billboard #9
Seals & Crofts - Diamond Girl - Billboard #4
Roberta Flack - Killing Me Softly - Billboard #3, R&B #2
Joni Mitchell - Court & Spark - Billboard #2, Hissing of Summer Lawns Billboard #4
War - The World is a Ghetto - Billboard #1, R&B #1
Average White Band - AWB - Billboard #1, R&B #1
The Spinners - Spinners - Billboard #14, R&B #1
Gordon LIghtfoot - Sundown - Billboard #1
America - Holiday - Billboard #3
Alice Cooper - Billion Dollar Babies - Billboard #1
...and the list goes on, three of the four Doobie Bros. quad albums were top-5, and five of the nine Chicago albums were #1, and the others were all in the top 10, just to name a few more.