I think you forget that:
a. Tendy wasnt exactly scoring bucket loads of runs at the time;
b. Ganguly should've been dropped due to bad form;
c. India were in desperate need of an all-rounder; and
d. India are STILL a relatively unfit and poor fielding team
Chappell obviously misjudged the power that he would have (and whatever he did was quickly eroded by Ganguly etc) but if a coach is simply going to be ignored, why hire him in the first place?
Oh I am not saying Chappell had a hidden agenda to alleviate India of it's best players and bring about his doom. There is no doubt he felt what he was doing was in the best interests of the team. But the measures that he took were not the right ones in retrospect.
1. Tendulkar not making bucketloads of runs is NOT a factor in this, because every one goes through bad patches of form, he was injured and above all his form was not that pathetic in ODIs to warrant him being dropped to the middle order.
2. I agree with Ganguly's drop.
3. India always have been in dire need of an allrounder since Kapil Dev but the fact is it doesn't look likely to happen anytime soon. Sometimes you just need to accept ground facts and try to work around them rather than insisting that peolpe should come your way. Pathan was a young kid then and just getting into perfect his main skill that is bowling but got his mind all cluttered and unfocussed as he was made to develop his batting also which took a toll on his main skill.
The need for an allrounder is a bit overrated imho as India is now No.1 in test cricket without having the services of one in the last few years.
4. As I said before, such changes are fundamentally built into the system. Unless grass root approach to fielding does not change, it is impossible to bring about a revolutionary change in the approach to fielding just by pumping in the team with young blood. Whatever positives accruing due to the increased reflexes are rendered meaningless by the huge gap in skill and experience. That is exactly where Chappell failed, he tried to plug fundamental gaps with short term measures which did not hold good.
A parallel would be Australia's search for a world class leg spinner since Warne. Australia does not have a natural climate to produce leggies but their insistence of getting in anyone who could give it a rotation resulted in some utterly dreary selections like McGain.
Also to say he was "ignored" is a bit of disservice to the Indian players and management. Tendulkar indeed batted at No.4, Ganguly was dropped, and Pathan was pushed upto No.3. The reuslts were there to see.