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Actively seeking after the worst sharers and bringing them to court is a very major step to protect themselves from damage.

Won't happen. The only ones they will get are the small fish at colleges and those on large ISPs. You forget, 90% of the uploaders are overseas, and thereby not subject to US laws or lawsuits. The sharing continues primarily due to these types of threads and stories that spread the word that this stuff is out there. Suppose you had a favorite song while growing up. Then yesterday, you hear it on the radio... it brings back great memories. Now you check on amazon and HMV only to find it is out of print. So, you can either wait until you hear it on the radio and get a tape recorder going (now, that may be a copyright violation), or look it up on iMesh and download it from some kid in Poland. Or, just sit back and maybe never hear it again. The airwaves are public domain, and no radio broadcaster I am aware of tells us, "recording anything off of this station may be a violation of the artist's copyright". So, back when I was in school, we would tape songs after we requested them, and hope the DJ wouldn't talk all over the beginning of it. Or, buy the album, if we thought the artist's hit was representative of the rest of the album. We then began to see that this was seldom the case. Call it stealing, call it copyright infringement, whatever... it exists and it is not going away.

I haven't seen anything that indicates the majority of sharers are overseas.

As for your hypothetical more than likely that song is in the public domain so it wouldn't be an illegal copy. Recording songs off the radio actually is a copyright violation (if the song is still copyrighted) but it represents so little activity the RIAA really doesn't care. I also have the option of going to used music stores, checking on Amazon very well might have given me a line to it used since they're hooked into e-Bay.

Of course most importantly your hypothetical is completely out of line with the situation. The majority of downloading isn't great old Garry and the Pacemakers tunes, it's modern top 40 albums on the charts today sometimes not even released yet.

I don't think anybody is of the opinion that it will go away. The problem is that the casual bootlegging that we all participated in during our youth has, thanks to modenr technology, expanded to levels never previously imagined. People have the mentality that this is just like tape-swapping in school but it isn't. You can now have thousands of copies of your album downloaded in just a couple of hours, as opposed to the one copy per hour(ish) of manual tape copying. The RIAA is reaping the rewards of their own casualness, a method of violation that they never worried about before is now able to outstrip the most productive swapmeet bootleggers.