@LT, you must be doing something right, that is quite impressive.
In our case, while there is a slow drain of kids to travel, the rec league is doing a pretty good job of killing itself due to the ego and self-serving nature of the board members.
Last season, we had six teams in 12U. One was managed by a brand new board member who was tight with the softball coordinator, the other five by very nice people with ZERO coaching experience. The problem was that there were at least four experienced coaches (myself included, we won the 10U title the previous season) who were told that there was no teams available to manage. The end result was that the coaching inexperience showed on the field, and there were a lot of parents angry that their kids weren't progressing.
Based on the dissatisfaction with the regular season, seven of the 12U kids asked to play all stars declined, choosing instead to pick up with travel teams. This resulted in an all star team where nine of the twelve on the roster were first year 12U players, which would potentially make a great core to come back for the 2014 season. Six of those nine (my DD included) went straight to travel after the all star season ended with no intention of coming back to rec.
Team stacking, favoritism and politics do more to hurt rec programs than travel ball ever can.
I agree that poorly trained volunteer coaches hurt leagues more than travel. I've been coaching in my league for the past 5 years without a daughter involved. I am also on the board of directors and one of the main complaints I hear from parents who decide to leave the league is that they were unhappy with the coaching that their kids got.
When you have a fresh crop of volunteers every year I think it is important to have some sort of training for these volunteers. Unfortunately (in our league) it is getting tougher and tougher to convince parents to commit to coaching a team let alone go to a few training sessions.
Not sure what the answer is but our league is suffering from a decline in enrollment.