As a charter member of "The Club", I can attest to the fact that you are pretty much correct.
The problem with being a 3rd Gen collector...
or a collector of S&W all-metal DA/SA semi-autos generally... is that the vast number of rough, used condition police trade-in guns and re-imports tends to ruin both the value and attractiveness/collectability of the entire species. Who the heck wants to invest in pristine, high-quality, collector-grade examples when the same gun, beat-up as Hell, can be acquired for mere for chump change? Sometimes, it is hard to tell from photos a flawless low-use or factory-new example from one that has been cleaned up a bit or reconditioned. The things are pretty much indestructible.
That said, asking prices keep increasing (for new or decent shape non-LE guns) and I've been more or less priced out of the market at this point. There are a handful of the more rare versions that I still like to own, but the time when it made economic sense to invest in high condition S&W 3rd Gens has come and gone for me.