No they couldn't. They put the -300 out there for three years and sold how many?
In the bigger picture of things, the market the B757 was chasing was a niche; thin transatlantic. Transcontinental US missions could be done year round by the B738 and the A321.
Any further improvements would have required wing work and a new 40,000lbs engine, a sector which no engine manufacturer is currently active in.
Most B757 European charter missions can be done by the A321 and once the A321neo comes along, virtually all of them will be covered.
There's simply no market for a B757 in the modern world; Boeing saw right to cut the line.
I think had the 753 been introduced a few years earlier and if the range was equal or better than the 752, then Boeing could have sold a few more. Had it not closed the line when it did it would have been closed by the end of the last decade I reckon, or perhaps up to the point where it announced the 737 MAX.
As much as I like the 757 due to its power and versatility, you're right in saying that there's not many routes (UK-Europe at least) that can't be done by the A321. A few exceptions include anywhere where the runway is short like JSI, but if the A321neo can address this then as you say the 757 will be redundant. I anticipate either 787s or 737-9MAX/A321neo to replace 757s on transatlantic routes.
It wouldn't surprise me if the only 757s operating in 10 years time are the 753s due to their capacity, but even then the youngest will be about 20 years old.