I agree with much of what you say. I too thought Rossi looked good and strong. But he's just lost that killer instinct that the rest of the field have. I don't know what it is, or why but he has just lost it. He hasn't lost any speed as he can still run just as fast as everyone else and even set a few fastest laps in races throughout the season. What he's lacking is just that drive you see in the most hungry of racers, competitors or sportsman.
I'm sure some of it is down to him just not thinking it's worth the risk and really in his position it isn't worth it. He's got 9 titles and won tons of races, along with hundreds of podiums.
So Rossi always talks about the motivation has to be high in order to race. I still think his motivation to race is still high, probably the highest it's ever been. But it's his ambition that's not where it should be. He's motivated to race(because it's his passion and he loves racing) but he's not motivated to go out and win races and be that portrait of dominance he once was. That's where I see the motivation is gone.
The ambition is gone for a litany of reasons. He doesn't have the right bike, the electronics control to much now(or everything is dependent on them), the tires don't inspire confidence, the grid is ultra competitive now and let's face it, he's just getting older...