The headline's a bit misleading, as the article itself is more about the potential domestic woes in NZ, rather than the mooted "World League". I can see there's some real cause of concern about numbers at lower levels and schools dropping off in the one country where RU is the main #1 sport.
Whether it's cyclical is another question. The issue surely is that while at International level there are teams that can push/challenge their position as the top team in the world, at the next level down, Super Rugby, there's no real competition. When I do my predictions on Superbru on that competition, my rule of thumb is always back the NZ team, even away in SA. The only team I have to think about that is when it's 2 NZ teams playing each other. That means the competition in the minds of the viewing public isn't as interesting as it once was. As fans drift away, there's less of a draw for youngsters to want to play in order to emulate their heroes.
The other side of it, the lure of money in other regions for players may man that the NZRU have to consider a lot more "sabbatical years" that they offered players like Carter. Let them spend a year or 18 months earning in Japan or Europe.

As for the "World League", I hope that it's a non-starter. There's already enough International competition with the RWC, 6N, RC and lower level like the Americas 6Nations, European Championship etc.