Remember, translators are secondary. A full power station is not. If a fringe area of reception lost to a translator generates complaints from the fringe station's listeners, the translator can be forced to move to another frequency or go away completely.
I'm not going to say AM radio is healthy. In fact it is similar to a neighborhood I grew up in. When growing up it was the pride of middle class suburbia. Today it is poorly maintained homes, an area of high crime and a few pockets of still nice neighborhoods. AM still works in some parts of the country and some stations are still quite viable. In my part of the country, AM is not as the original poster indicated.
I wonder if the original poster owned an AM station how he'd feel. Would he be in a position to operate a stellar facility or would he see his investment he worked so hard to develop struggling and welcoming the FCC to find a few things wrong that would force him out of the business? I think it might compare to the guy down on his luck, flipping burgers at McDonald's and driving the beat up car with a burned out tail light and headlight, plus an expired inspection sticker. The car is the only way to get to work to make the money to fix it, and provide some of the income for his family. So, do you impound the car and send the driver to jail?
The translator is a boon to AM stations. Night power, if you're lucky enough to have anything at all, ends at, say 7:30 am and begins as early as 4:45 or 5 pm in the winter months when advertising sales are at their annual peak (Christmas season). You have a station with minimal coverage in crucial commute hours and possibly hurt by the station you protect even in the first and last hour of daytime coverage. Thus, a station that cannot adhere to the typical radio listener lifestyle, means regardless of what you do, you are severely handicapped. That is not to mention other factors. My point is the translator, although not full coverage, gives you a shot to at least make ends meet.
A translator, regardless of the coverage it actually has, is a plus. Talking to a friend that works deals between programmers and stations, when a business is looking to lease a station on the AM dial, a translator always means a higher lease price even if the coverage area of that translator is so insignificant when compared to the AM's daytime coverage. How much? An extra 20-30% a month depending on the market. With a good percentage of the AM's daytime coverage it can be much more.