Lootbox mechanics aren't inherently bad. It IS fun to be surprised! This is why cultures around the world developed traditions, from piñatas to christmas presents to hampas-palayok, that revolve around getting a lil surprise. It's fun!
Everything OP said is true, though unhatched eggs were a lootbox by definition from the beginning. The fact that so much of the internal economy now revolves around them is due to the age-old gamer tradition of "fashion is the real endgame." When you've accomplished all else, the next best challenge you can set for yourself is to do those accomplishments while looking good as hell. It's a needless level of extra effort that signposts to other players that you have the time, ability, and know-how to actually put in that extra effort. It's the divide between casual and dedicated engagement with a game.
Just as OP said: players like the look of a dragon with no parents and no offspring on its profile. It's needlessly more time-consuming and more expensive to have a lair full of pretty gen 1s. You don't have to do this. But like the neighbor with the immaculate garden (for whatever their definition of an immaculate garden is), having this kind of lair is a signpost of elevated dedication, both to yourself and to others. And this feels good! It feels nice to look at a lair of pretty g1s and be like "DAMN, that's dedication! I did that! I set all these goals and saved all this currency and accomplished all this!!"
I think it's really telling both a) how many players engage with gen 1 collecting, and b) how accessible it is to engage with gen 1 collecting. The price hasn't gone up in years, the ability to trade for the premium currency means you don't have to pay an actual dime, and there's a yearly festival that dumps a ton of lootbox eggs on everyone who can bother to sign in and do their dailies, let alone actually grind the coli or set up a "my stuff for your chests" thread.
I do wonder how it might be possible to accomplish the same sense of elevated dedication with regards to breeding dragons. You see this a little bit with lore dragons, but it's just not the same. It doesn't hit that sweet intersection between rarity (which in unhatched eggs is accomplished via the randomization) and goal-setting accomplishments (finding the perfect gene combo, acquiring the genes, acquiring the perfect skin/apparel, etc) that gen 1 hunting offers.
It's fun to be surprised by the outcome of an unhatched egg, and it's satisfying to put in the effort to gene and dress the dragon.
