You're wrong, they didn't get rid of the LFG channel, they tied it to the LFG system. People DID use LFG, but mainly as a way to get into the LFG channel, because unlike Trade chat the LFG channel was GLOBAL.
Imho it worked a lot better than the thing we have had to live with since WotLK for reasons explained in my other post
Well you're right and you're wrong. When the tool first came out the LFG channel was still in existence, however no one used the tool so they got rid of the channel in an attempt to force people into the tool. People did not like this and so then blizz gave back the LFG channel but in order to use it, you had to be flagged as LFG. People still didn't like this so they just started spamming chat to find their groups.