It's not the PUG culture that died with Abyssea/VW, it's the actual event linkshells themselves that died. Everything became PUG.
Abyssea required 2-3 people to do most stuff, and pretty much everything there had multiple drops so that you could easily throw together a group of people who are all benefitting from the content.
Small clarification:
It took some time for things to get to that point, it's not like it happened on Day 2 of Visions of Abyssea.
At first it was the group of players who were already a de-facto "static" who started efficiently farming just exactly the stuff they wanted with no wastes. Some of those groups already had multiboxed mules in an era when they weren't very common.
Then other groups slowly started the same approach, bit by bit.
Ultimately by the time Heroes of Abyssea was out and the content wasn't new anymore, every small group of noobs was able to farm their own Empy at their own pace.
But to get there it took, what, over 1 year? Probably more.
Things didn't change in a day, it took time.
There were several LS (among which mine) which still continued to set up Abyssea LS events. And then they were farming Abyssea on their own with friends outside of official LS event time.
With this clarification said I can't deny that the importance of LS events slowly faded, bit by bit, only to promote smaller groups, just like you said.
Is this bad though? I mean pros and cons.
The world of "you can only do stuff if you're in a good HNM ls otherwise bye bye" had several good aspects but several cons as well, let's try to see the whole picture here instead of nitpicking just the few aspects that corroborate our point.
I recall Asura had an honor system in place for a long time.
A Long time? You're fooling yourself Perg.
What you're talking about was ABSOLUTELY AWESOME but alas it wasn't very long lasting and even then there were those LSs who would just ignore it.
Which era are we talking about? The early HNM era with Nantekotta/Nantekotte, KirinTheDestroyers, Eminence?
The latter era where several of these LSs were dead and some new ones (among which EU ones, like Chroma) started to surface?
Or are you talking about after that? Because by then the HNM LS scene was dying/dead and around that time Abyssea came out anyway, which kinda started the process me and you just discussed about in the messages above, so...
I dunno, I have several fond memories just like you, but talking just about those and ignoring everything else sounds to me like a big pair of rose tinted glasses, if you ask me.