> The question is, why did they continue for so long?
Well, as said in the original quote, it's apparently also good for internalizing a sense of weight for animation. So presumably they continued at least in part because it's good for things that aren't as obsolete as portraiture -- animation isn't the only way to make money in art these days, but it's not exactly in low demand.
I'd wonder why they dropped it, but at a guess, it's some combination of low demand (first they make it non-required, then students who don't realize the broader applicability stop taking it) and higher cost (you need to hire one or more models).
I think the arts are in a weird situation because they're sort of like an ascended craft. Basically, when the bread-and-butter of portraiture died, art had enough social clout to be able to survive without it, doing just art, without any particular service attached. That rapidly unpinned art from any particular set of skills - so now you get artists who do dance, or cut holes in buildings, or send postcards.
So while some of the traditional craft side of art has value to other industries, it's not really that important to what art has become.
My friends who did mechanical engineering had to take classes on tool making.
Meanwhile nowadays you have metal sculpturers who cannot weld.
Not the same ones as you would pick perhaps.
So really the odd thing is not that they stopped doing life drawing classes. The question is, why did they continue for so long? It would be rather like doing an engineering course where a core competence was the construction and maintenance of steam engines.