I'd say both DTVA and bmi were to blame for the declining passenger numbers. The first signs of trouble came soon after Teesside became Durham Tees Valley, this was followed by bmi removing business class off nearly all domestic routes - definitely not a wise move when most passengers are business pax!! bmibaby's pull-out was the biggest factor, local people didn't seem to realise bmi and bmibaby are different airlines under common ownership, therefore when baby went, people thought Heathrow had gone with them. Finally, as has been said, the timings were atrocious, and that killed off any hope of keeping the route.
As for any potential Flybe service attracting leisure pax as opposed to business pax, would this be a bad thing?? As has been dicussed already on this thread recently, it's the leisure pax that bring the money into the airport by using the various vending machines, games arcades, pub etc.
I can't really see a bright side as such to all this, but at least there's no reason to suspect that any of our remaining passenger services are in any danger at this moment in time.
Make no mistake though - Durham Tees Valley Airport is now on life support.