As long as the base PS4 and X1 have to be supported, then your argument falls flat on its face. Those games you listed that "could be way better" would be exacrtly the same, since developers would still have to support the base Xbox 360 and base PS3. Sony and MS are going to mandate that these consoles be supported as part of the platform, since the vast majority of the platform users will be using that base specification, and it would be horrifically bad PR to let those users get the feeling that they're being abandoned.. Remember the vast majority of a hardware's sales tend to come after it's first three years on the market, because that's when consoles tend to meet a price threshold that tends to bring a higher volume of sales. New, higher spec'd more expensive consoles isn't going to change that in the slightest. If given the choice, most people are going to want the cheapest console, not the most powerful one, especially if they both play the same games.
Let's just take a look at what the PS4 Pro has done since it's announcement. Nothing has really changed for the vast majority of PS4 owners (over 90%) except now, development costs for the people making the games has risen since engines have to be revised to accomodate these new specifications, and specification specific optimizations and modes need to be made. What we don't see is tens of millions of PS4 users upgrading their consoles to PS4 Pros, and we also don't see the vast majority of new console buyers opting for the PS4 Pro over the PS4. The PS4 Pro is a very niche product for a very small minority of the userbase, and there's no reason to think Scorpio will be any different.
5-6-7 year long development times for games isn't exactly a new phenomena (Hello Duke Nukem Forever, and Aliens: Colonial Marines), so i don't see why the industry needs to change to accomodate that. If anything, the industry has tried to stream line the submission and certification process, switched to familiar hardware architectures, and dramatically improved developer tools to ensure that great games can be made and released quicker, cheaper and easier than ever before. The push is for shorter development times, not longer ones. I don't think this "generation" is going to last any longer because of the existance of the PS4 Pro and Scoprio. The PS5 will come when PS4 sales start to trail off and developers start complaining about how the base PS4 and X1 are impeding their development. I think the PS4 Pro was an experient by Sony to see how the market reacts to such a console, but based on the results, I don't see any reason why its existance would change the schedule for the PS5.
P.S. I say this as a PS4 Pro owner, who doesn't have a 4K TV and has no interest in getting one in the next 4-5 years. The only reason I had one is because my launch PS4 was starting to act a bit flaky, and gamestop had a hell of a trade in deal for the PS4 Pro at the time.
I know they would have to support the base model. But mind that, when the PS3 arrived, most consoles in the wild were Slim or Super Slim units. Most OG PS3 were already gone. So we can assume that, maybe, most PS4s will be Pros. The question is not the devs, it's the experience people get. Shadow of Mordor on PS3 was a sub-HD game running at 20 fps. So people wouldn't play it because it was plain terrible. Let's imagine that a PS3 Pro did existed. Maybe that game would be 720p and a stable 30 fps, so people would still want to play it. The Slim PS4 will be the top seller for a lot of time, but towards the end of the gen, the Pro will overtake it. Same with Scorpio. In 2012-13, PS360 sales suffered. Game sales in 2013 were terrible, with a lot of good franchies flopping badly. The Pro and Scorpio are here just to avoid that these 2 extra years result in a dying market.
You are looking at it thinking about the present. Take a PS4 game on a OG model and it isn't that much worse than the same game on PC running on ultra. You can see, the difference, but it's not ridiculous. I'm talking about 2019. Just remember how bad PS3 was hanging on in 2012 and that's the point of having a beefier unit.
You're trying to justify that long cycles aren't new using 2 games that had severe issues with their development. PS2 games could be made by teams of 20 devs in 2 years. Indie games nowadays use more than that. I'm not saying PS4 Pro and Scorpio will make the gen longer, but it was clear with PS360 that 7 years made the studios suffer because people were buying less games. Sony and MS seems to believe that a better hardware may offset this software crysis. So the point isn't really to make the gen longer, but to make the new duration viable.
Of course, when sales go down, they will launch a new gen. But this is related to what the market wants, not what devs wants. The guys who decide who gets the games are wearing suits and don't even know how to use a printer. Devs will code to the platform their bosses tells the to do so. They supported the Wii when it was selling well even if it was last-gen hardware.
If the Pro and Scorpio really don't have any impact even when looking at the last 2 years, then I will agree with you that it was a failed experiment. It's indeed a possibility, specially if the regular models manage to sell for sub-150 prices or maybe even 100 bucks.
Off-topic: You said your PS4 was having issues. Could it be an error CE-34878-0 with some games? Mine has those frequently with UC4 and Horizon, so I was starting to think about getting a Pro and trade my current unit.