I don't have to explain:
Theora really can't even compete with MPEG-1 on either video quality at a given bitrate, or performance. It was very specifically designeed for extremely low quality, extremely low resolution, extremely low bitrate streaming video, over a decade ago...
This isn't true. There's plenty of results out there which say Theora is, while not the best, a good codec. To quote Wikipedia:
More recently however, Xiph developers have compared the 1.1 Theora encoder to YouTube's H.264 and H.263+ encoders, in response to concerns raised in 2009 about Theora's inferior performance by Chris DiBona, a Google employee. They found the results from Theora to be nearly the same as YouTube's H.264 output, and much better than the H.263+ output.
There are plenty of people proclaiming that because it doesn't come out top, it's useless. Theora is far from useless: the results in any scenario that H.264 (even main profile) would be used, are still usable if you select Theora instead. They just aren't as pretty, because it's just not designed to the same constraints as H.264.
Becoming the HDTV standard would be an unrealistic goal. You attribute Theora not becoming the dominant standard due to Xiph's mishandling of the codec. The more obvious reason is politics: the MPEG group exists specifically to create audio/video standards which can be licensed. Broadcasters and content providers generally only use MPEG standards, and they just love licensing.
I'm interested to know what your theory is that Xiph could drive HDTV standards and have handled this better than a small company could?