I went to one Chicago Powerfest, the one Nocturnal Rites played (the main reason for the 9 hour drive), and I had a good time. However, like you said the lack of interest is that they never did establish a true niche, and these days and in every marketing book I've reviewed says a lot of the same thing. Know your market, and market to it, don't try to be everything to everyone, because then you're bland to everyone. Not enough bands of a certain type to pull that CERTAIN type of fan to take a trek from out of town, nor attract enough locals.
Now personally I can go to a festival with lots of different stuff, and been to many different types of festivals, ProgPower (all but 2, 4 and 10), all the Classic Metal Fests, PowerMad 1999, Wacken 2008, Headbangers Open Air 2008, Keep It True 2007 and 2008, Ozzfests here and there, Rocklahoma 2007-2009, and Foundations Forum Conventions in the early nineties from 1990 to 1995, BUT I enjoy a whole wide realm of metal. Not everyone does, and I can respect that.
Powerfest should have either been a complement to the fall ProgPower (much as Keep It True and Headbangers Open Air complement each other for the times of the year they are active but cater to the same diehard true metal cult metal fans. Ditto the Power metal fans in the U.S.. That I think would have been more of a winning strategy.
However, I've booked shows and they are a pain in the behind, so all the power to those who attempt to start new festivals.