I think Disney made a good business move here.
Absolutely correct! That, indeed, is exactly the problem.
The reputation and overwhelming success of the Walt Disney Company has been built on a legacy of consistently
excellent business moves - and frequently, simply
brilliant business moves (like the original Epcot Center). Many people can construct a (good business strategy) outdoor shopping mall. For a
resort with Disney's reputation and which commands premium prices we should reasonably expect better, like perhaps for Disney to maintain its own previously established standards.
Downtown Disney - from back before Pleasure Island even existed and it was the Walt Disney World Village - was and should be more than just another shopping center. Innovation and show have never stopped at the borders of the theme parks before; It's the Walt Disney World Resort (Vacation Kingdom). not just a collection of isolated theme parks. Why should it be acceptable for Disney to rest on its past success, not even try to create or innovate, and settle for just "good" when the company used to be better than that?
From a business standpoint though why would Disney invest such money AROUND an area that has seen a huge drop in it's guests when it can use this space and save money?
I have never seen or heard anything to suggest the Marketplace has seen a "huge drop in its guests", so I'd really be curious to know your source for this. Indeed, judging by the masses which descend upon the place, it looks to be pretty successful (and profitable). Do we really need to ask why Disney would want to build upon its success?
Instead, replacing the abandoned P.I. clubs with rented-out shops and restaurants will indeed save money - it's the cheap and lazy solution. While it will surely be a success, and even reasonably well executed, it doesn't appear it will be a particularly unique experience - the sort of thing you can only find at Walt Disney World. It is those unique, creative or innovative, and "magical"
resort-wide experiences which lead people to spend big bucks to visit WDW.
innovative things in the places they belong like the parks
Innovative (creative, imaginative, etc.) experiences
do not just belong in the parks. Again, it is the Walt Disney World Resort, not just a collection of theme parks.