In other words, LCC entrants and higher cost structure effectively made PIT unworkable for US (at their costs structures). I can see how connecting that many passengers, through PIT (at the high costs) would require additional 'fat' to make it work (at the higher costs). The LCCs (especially those with a lower-costing hub operation where they could pull O/D and essentially attract those O/D away from paying the 37% premium to PIT) came in an took away traffic, to their lower costs. I can see how that would erode US's ability to operate, and the decision to head to PHL.
Consider the airport now. How much does WN have, market share wise (and many don't even consider WN to be an LCC anymore)? It all boils down to costs.
Can you imagine the business case for CLE, if the improvements were allowed to have happened? High landing fees, high user fees, higher costing operations - and the competition is, in most cases, from LCCs.
The failure of the PIT hub was not caused by LCC entry into the airport or its cost structure -- at least, the cost structure wasn't material until US had already made large cuts to its hub at the airport. I've detailed the reasons for the failure of the US hub at PIT before:
Before the mid-1990s, PIT was really the only large hub which could efficiently serve the Northeast. There was plenty of airfield so there were few constraints on air traffic, unlike the NYC airports, DCA, PHL, or BOS. IAD had plenty of airfield but the original people-mover design wasn't suitable for a connecting hub. Also keep in mind that before the mid-1990s, the regional carrier fleets consisted almost entirely of propeller aircraft, so the regional affiliates could serve markets up to perhaps 500 miles away from a hub (although a 2+-hour flight on a prop was a pretty dreadful experience for most passengers). One other point was that PIT had some advantage due to incumbency; it had been a hub going back to the Allegheny days (and was also a TWA hub at one time) so it benefited from passenger loyalty & familiarity -- and those contributed to US's dominance in the smaller Northeast markets like BUF, ROC, ALB, BTV, PWM, etc. by allowing US to offer the most desirable schedules, often on mainline aircraft. If you wanted to fly between BGR & ROC, CRW & BTV, CMH & PVD, BDL & DAY, etc., PIT was probably the most convenient choice. But... many of the markets dominated by US weren't exactly thrilled by the sky-high fares which came along with their dominance.
Two key things happened in the mid-1990s: OH started to fly CRJs from CVG to many small US-dominated markets in the Northeast (and made ginormous profits by doing so) and WN built its BWI hub right on top of the US hub which had been inherited in the PI merger. BWI was in a weird position for US because it geographically overlapped with pretty much all their other hubs and wasn't the preferred airport for the D.C. market (though it is for Baltimore, of course). But once WN started growing BWI and adding service to markets like PVD, MHT, ALB, BUF, and ISP, the lower fares in those markets were less sustainable at U.S.'s high structural costs. DL/OH also took a lot of traffic via CVG, both in the larger markets where US offered mainline service and the smaller markets where US was all or mostly prop equipment. Plus CO was flying RJs from EWR/CLE and NW from DTW to take even more passengers who had historically been on US.
The wheels were already starting to come off at US in 2000. In that year, US lost $53 million while DL was posting a profit of $1.6 billion. 9/11 and the contemporaneous recession exposed all the weaknesses at US and the airline nearly collapsed. The hub (largely Metrojet) at BWI was gone by mid-2002. PIT was the least strategically valuable of the remaining hubs thanks to other carrier RJs and WN to smaller markets in the region, so US reduced the hub. Most of the costs of the PIT hub were fixed, though, so ultimately those fixed costs just ended up being spread across a declining number of passengers.
I can't really blame Allegheny County for the cost of the airport because they basically built the new terminal for which US management had asked. When the hub carrier goes from 500 daily flights to 200, costs per passenger are going to go up a lot. CLT would have likely faced similar cost issues if US had cut flights by over 50%. And IIRC, even at the time when US management was blaming Allegheny County for high costs at PIT, per passenger costs at PHL were actually higher than PIT.
Looking back through history, you'll see a number of smaller cities acting as hubs for major air carriers. For example, AA had RDU, STL, and BNA (the last 2 inherited from TWA), USAirways had PIT, Northwest had MEM, and United had CLE. All of these cities have since been dehubbed. In general, the big three US airlines' hubs are all located in bigger cities, with the notable exception of AS, which has made major hubs/focus cities out of both SAN and SJC. What made these smaller hub cities unprofitable (despite them having been around for a long time), and why is AS seeming to be investing in building hubs in smaller cities as well?
(1) AS is not one of the so-called "big three."
(2) Neither SAN nor SJC is a "major hub/focus city" for AS. By departures, BOS & DCA could be considered larger "focus cities" for WN than either SAN or SJC for AS (and WN serves more cities non-stop from DCA than AS from SJC).
AS has largely been opportunistic in both SAN & SJC, mostly by adding non-stop markets which were unserved/underserved or dropped by other carriers, but which have enough traffic to support a daily or sub-daily Q400/E175/737. There are a few exceptions to that, like the SLC-SAN/SJC revenge flying or SJC-SAN/SNA. And it makes sense if they want to grow, given facilities constraints at their primary hub of SEA and limited market size at PDX.
As others have pointed out, changes in the U.S. airline market, including consolidation of the legacy/legacy-like carriers from roughly ten to four since 2000 and the widespread deployment of regional jets have significantly reduced the number of hubs needed to offer a comprehensive nationwide network. To be fair, though, I'd consider the closure of the RDU & BNA hubs to be more of a response to market changes in the late 1980's/early 1990s when EA & PA exited the market and CO underwent significant retrenchment.