While LDY is totally at the mercy of Ryanair, and god forbid Ryanair ever decided to leave, your statement that the airport has put all its eggs in one basket presupposes there was an alternative basket which I don't think was ever the case.
The airport opened in 1979 and for 20 years really only had one carrier, namely Loganair, whose focus was on Scotland. Accordingly they were only interested in flying to and from Scotland (and to Dublin when offered a huge PSO contract). Now while I feel it was disappointing that Loganair only ever offered a Glasgow route and didn't consider an Edinburgh route which I believe would have been equally successful given the equally large passenger pool from Northern Ireland, nevertheless they did increase the GLA flights to 2 daily but subsequently reduced it to 1 daily.
Flybe operated a feeder service to BHD for a few years, but never offered direct flights. Aer Lingus did similar to DUB.
Macair, based themselves at the airport, operated to Edinburgh and Birmingham and then went bust within two months. (Thanks a bunch Derry! If they had choosen BHD instead they'd probably still be in business.)
So until Ryanair arrived there wasn't any eggs and only one basket.
I agree that smaller aircraft with improved frequencies and more routes might be more useful, particularly for business travellers, but even with that the airport probably wouldn't have as many passengers as it currently does. Loganair only carried at their peak about 20K pax p.a. to GLA. Multiply that by 10 or 12 for the multi-million-plus pax p.a. airports in the UK and you still only have half the passengers currently carried.
Notwithstanding low airport fees generated by Ryanair contracts, it will ultimately be passenger numbers that generate income. Even with a niche operator, it would still be necessary to have Ryanair providing the "heavy lift" to have decent passenger numbers.
On the other hand, losses at the airport have risen with Ryanair passenger numbers without any explanation to the local rate payers of why this should be so or even at what point costs start reducing let alone the break even point. There in lies the conundrum. Do the rate payers want an important "loss making" airport or local "profitable" airport? As they say in business, turnover is vanity, profit is sanity. Personally I must be vain.