I think there's light at the end of the tunnel. It's almost a half-full/half-empty thing at the moment, though. For there to be light at the end of the tunnel we need to bank on significant improvement from almost all our young guys, particularly the taller ones.
However, I think a major oversight in your summary is our pace - we might have a TOUGH HARD midfield with that team, but there's not much foot speed there.
I'm not sure we can say we have 'the nucleus' when we're '1/2 forwards away', particularly as you've mentioned Miller as finding some form, and Newton needing to progress. Given that a 2 KPP forward line seems the norm, we're a long way off!
PS. Frawley as a flanker seems to be an idea getting momentum - anyone else out there that doesn't see that he's a natural fit for a HBF?