I agree that the LJ format may be a contributing factor. It makes drabbling and noodling very easy, even rewarding as the feedback can be almost instantaneous (compared, say, to chapterizing larger works on the lists.) List organization rewarded posting in series complete stories. Or maybe I'm theorizing off my own narrow experience.
There may also be something to the life cycle of a fandom. As writers have explored such epic themes as interest them, do some gradually wind down to shorter forms, while some others move on to shinier fandoms, and return only for short comfort fics in HL? There are some new writers to HL that have put out some nice plotty longfic in the last few years--Keerawa and Dasha, for example. However, Ignifer and MacGeorge's Origins indicate many of the classic HL writers still got game *g*.
Are there other factors at work? Is life in general getting a little too complicated to generate fully involved fantasy tales? My own recent writing history shows a serious lack of ability to put in the long term focus necessary for longer fics. I know in my case work and other issues tend to shorten my concentration (and my fic.)