I'm not sure I follow your argument. And this "vicious cycle" leads to...?

CR123 may be technically superior but it is more expensive and overkill for many applications, so I see little economic argument for it becoming even more ubiquitous than it already is.

Arguably, the relatively recent boom in high powered LED flashlights has expanded the number of people using CR123-powered flashlights because alkaline cells just don't cut it for high drain use. Ten years ago, very few people had CR123 flashlights. At that point, Surefire was still basically "it" in that niche. Now there are a gazillion different CR123-powered models out there and those lights need batteries.