My observations are fairly similar. However, since I live in the great state of Californication, we have some state-funded Amtrak service that carries quite a few passengers (they're usually in the top 5-6 nationwide for ridership and cost recovery), runs fairly often (6-12 trips/day depending on the corridor) and that's moderately competitive with driving in terms of time and comfort. Certainly far better than the faint shadow of former (subsidized) service that Greyhound still provides. Cost of course is another matter -- makes sense for business trips, but if more than 2-3 people (depending on the trip) need to go it makes more sense to drive, and it's usually a bit faster because you don't have to make as many stops. I think it's one of the better uses of state money -- certainly better than trying to do a from-scratch gold-plated HSR line.

For trips of over 400 miles (e.g. N Calif-S Calif) it still makes some sense to fly as long as you can use a secondary airport (like Oakland or Sacramento to Burbank or Orange Co or Ontario) and it's a business (1 person) non-stop trip. For downtown LA runs the train still comes in handy - take the first morning flight into Burbank then jump on Metrolink or Amtrak just outside the terminal instead of renting a car. If you're bringing the family, though, drive -- 6-7 hours to LA, 8 to Disneyland, 10-12 to San Diego, so there's the cost of an overnight stop for the SD run, but it still works out about as good as Amtrak for time (or better, considering how much of the useful (i.e. not the Starlate) run is on a bus) and better for cost. For even longer trips, flying is the only practical alternative (I don't have time to spend 5 or more days getting to Chicago let alone the East Coat), but it has all the downsides you mention - plus arranging the connections right (DON'T buy a "direct" ticket on Southwest!).