This is not due to dmoz.org, but due to increased traffic to other sites (myspace, youtube etc) and changes in the Alexa algorithm. You can see this if you compare the Alexa data of dmoz.org with webmasterworld.com. These two sites have almost equal rankings and show exactly the same graph. I wouldn't call WebmasterWorld an outdated concept though, although it shares many similarities with dmoz: the content is specialist-volunteer driven and the work-environment for these volunteers is ad-free.
I used the Alexa rank in my previous post to position dmoz.org relative in the global internet traffic, but always take care when looking at the data in an absolute way.
And about your first argument, DMOZ is not there for the visitor. It is there to organize the web in a hierarchical way. If people want to use it, fine, if not, also no problem. But it is the editor who ultimately defines the quality of the directory compared to other directories, so he should be happy in that environment.