It may have failed at adoption, but the problem of decentralizing DNS has been solved.
I am unconvinced that a solution nobody uses counts as a solution to a problem anyone has.
It might just never happen. Until then the "worse is better" rule applies.
I have used ncdns in conjunction with dnsmasq in the past and I am happy that there is a solution out there that works just in case the other fails.
If the very unlikely case occurs and bitcoin stops being a thing there is always the possibility to change the POW algorithm. Until then Namecoin is a solution that works ultra reliably since years and most importantly unlike other solutions it works today.
Do you assume that if Namecoin were to become super popular, the price of its coin would become very high? I don't see why. Can you explain this assumption?
Namecoins are not Bitcoins, they're not supposed to be used as a currency, so the logic that the popularity of Namecoin would create a huge raise in its price is not straightforward.
In the mean time merged mining is the best compromise between rock solid chain security and environmental impact.