There are many things that can run smoother over the network if done more cleverly than just copying frames around, but:
1. Most people do not need to work over the network, specially those that have the greatest need for performance: games, video playback and such.
2. Copying frames is by far the simplest solution.
3. Being able to copy frames doesn't mean you cannot _add_ a cleverer solution.
So, a local only display covers maybe 95% of user needs, and with dumb frame copying you may be getting that up to 99% (statistics right out of my hat, but still). The remaining 1% _can_ be worked out, or just keep using X11.
The alternative is forcing network "transparency" down everybody's throat, even if they do not want or need it.
It's not really that nobody needs X11. I do, for instance. But I'm not so stupid to not realize that most people don't. And forcing them to play a price for something I need doesn't sound like a great idea.