1. Who is buying rap/hip-hop
The white kids (majority), like everyone else has said. I used to work in music retail and believe me it is obvious.
2. Bootlegging/burning does affect record sales
To an extent, but it is no excuse. I agree with lovelyivy84, if the record is hot, you will move it. If you got 3 bangers on there, it is gonna collect dust, point blank. Most times I have a record months before it is released. But if it is fire, I will purchase it the day it comes out. If artists stop putting out the 3 hit rubbish and start coming with some substantial music, maybe things will change. I hate that the industry has began using the p2p sites as a crutch to explain away laggin record sales. The fact is that they need to check themselves...A&R, Marketing, promotions-wise. You can only use SO many cardboard cut-outs as far as artist's images go. Some of these artists have REAL talent, but you would never know because their management forces them into this image that they know will sell to the public. Although this trend may produce a temporary spike in sales, it is NOT conducive to longevity.
3. Tupac/Biggie's death
I think that this may be a valid issue. It goes deeper than lyricism. Tupac and Biggie had an UNDENIABLE appeal that included content, charisma, delievery, AND lyricism. Both were masters at straddling the line betwen street cred and mainstream acceptance. Jay Z is the only artist I can think of that does it now, but he is definitely lacking the spirit that Pac and Biggie had. If Jay Z is to be hip hop's new legacy, we are in trouble.
4. Is hip hop loosing its luster?
In its current form (mainstream that is)..yep.
5. Do you see any other artists (other than those mentioned in the article) that will have longevity in the business?
Hip hop wise? I really wish that the public embraced the concious movement like they embrace Murder Inc.

Artists like Talib Kweli, the Roots, Common, Mystic, have SO much more to say, and so much more to offer the airwaves. People are just not ready. Sigh.
R&B has a better chance. Whether you hate her or not, Alicia Keys has staying power. I heard the chick 4 months before she came out (and before she had Clive Davis boosting her up), and knew she was for real. She writes, produces, and arranges her own material. Nowadays, that is almost unheard of. Until you can be behind a production board, you will never know exactly what kind of task that truly is. That is why, while I do not appreciate Destiny's Child image-wise, I do appreciate the fact that Beyonce has taken it upon herself to produce. It is not as easy as it appears!
Sorry this is so long, but music is my heart and soul, lol.