I think full size Formula One is a good example of the dangers of a mod class with zero restrictions, and one with too many restrictions. In the early years you could build your own competitive car and motor and have an honest shot. Technology advanced exponentially, which drove the single chassis private owners out of the series due to development costs. Then the FIA, in an attempt to control costs implemented (IMHO) wayyyyy to many mandates and regulations and now we have these crap sounding turbocharged V-6s with a joke of a hybrid system thrown in to appease the granola mafia idiots of the world... What a waste... Formula 2 has better sounds and racing btw... But I digress...
Anyways my point? Perhaps in an attempt to regrow the mod class you begin with implementing a logical regulation besides what is already there (1/12, 1s, etc) and maybe use a control spec tire like the Green/Blue spec foam combo that many of us already use normally (like what McFactory said earlier here). The biggest barrier to guys entering 1/12 scale competition (whether its a true problem or not) is their perception that the foam tire thing is a little too much like black magic, that's what I've heard anyways, when trying to convert some of my buddies over to the class.
As far as changing motor rules-I think the con of doing that would push too many of the true diehard mod guys out of the class. I think a logical and rational compromise to both the die hard guys and the new guys would be to use a control tire. That is, if you want the class to grow.
Oh yes, and if you can figure out a way to get kids off their butts and away from their Xboxes and Playstations-we probably wouldn't be so concerned with growing the sport, let alone having that conversation "How to grow RC?" which I think has no answer besides just going out and racing and letting the passers by get a glimpse and maybe an interest in the sport.