I think they understood, but I don't think they cared. France always had grander designs than just the South, and in order to put those plans into motion, NASCAR had to move away from its roots to something that was more easily digested by people outside the South.
While the tobacco settlement had a lot to do with things, I suspect NASCAR was perfectly happy to trade the Winston Cup for the Sprint Cup and to trade Kodiak for M&Ms on the race cars.
France traded the hard-core base for a bunch of fickle sissies, for who you can not make enough new rules to satisfy. He tried to create a science from an art and failed miserably. Until he removes himself and takes Helton and Hunter with him, NASCAR will continue to deteriorate.