Definitely a sad day. I was in shock for hours after I heard the news.
Buell has been a money pit for Harley since the start. When I worked as a service manager at a Harley dealership in Texas, we carried Buells. Unfortunately, we sold very few (maybe two in a year... including the one I purchased). The store owner finally decided to stop carrying Buells completely.
Little niggling problems have shadowed Buell from the start. They still have large numbers of recalls (even on models that have been in production for many years). The Buell club (B.R.A.G.) was a dismal failure, as was the magazine (FUELL). They tried rather unsuccessfully to make a name for themselves in racing. When they finally did (Danny Eslick won the Daytona Sportbike series on a Buell this year), it was very controversial. Buell never had much in the way of aftermarket accessories or merchandising. The Blast model was an embarrassment; and it only got worse when Buell had an ad campaign featuring him crushing a Blast into a tiny metal cube. And of course, Harley dealerships really had no idea how to promote Buells. They just don't know how to sell to sportbikers. Another issue is that Buell somehow managed to make some powerful enemies in the powersports media. One that springs to mind is the SuperBikePlanet.com website. They regularly made it known that they hated Buells.
So when you combine all these challenges, you get a snowball affect of the sportbike community deciding Buells are crap. That's what happened. A part of me is amazed that Harley kept Buell for as long as it did.
Kevin, to answer your question about why Harley didn't consider selling Buell.... I'll bet that it has to do with the fact that all the air-cooled models are still running on engines made by Harley. So, Harley is probably not interested in continuing production of those engines (which have evolved beyond the 1200cc Sportster engines that they were based upon). The two 1125 models use Rotax engines.
Don't get me wrong. I really enjoyed the four Buells I had. I'd keep my current XB12R if money were no object. But, I have been planning to eBay it for a few weeks now. I wonder if people will see it as a collector's item or as something that will be hard to get parts and warranty support for? I guess I'll find out when the auction ends.