I can see what your saying but like many have pointed out, it wasn't just Shawn making the choices, and he didn't have final say on things either, Vince did. Vince also was dead set on making Shawn Michaels the face of the company ever sense the stars from the 80's left, and he beat Bret Hart for the WWE title at WM12. It wasn't until Shawn hurt his back, was a mess in his personal life, and Austin got white hot that Vince finally moved on to the next thing.
Also I think I remember reading, that WWE had to move away from the British Bulldog as their possible top guy over the whole steroid scandal that hit them in the 90's, but that could've been a different time period I'm thinking of. I think I read it in the book, "Sex,Lies, and Headlocks" Anybody else know what I'm talking about?
Davey was collateral damage in the Warrior's release in 1992 along with a lot of other guys. Vince had to cut anyone who looked roided at the time and allegedly Warrior ratted that Davey had hooked him up with the supplier, which most agree was bullshit. It was Vince covering his ass and Davey got the short end... again another time where Vince seemed desperate to "make it up" over the years...
As I said in the previous post, Vince will screw someone over in a heartbeat if he thinks they deserve it or its to save his own ass, but if he finds they didn't really deserve it or he's been played will go out of his way for them.
Look at it this way, a LOT of guys who were bigger disappeared at the same time... The Warlord, Hercules, Paul Roma. All looked "roided".
Warrior was able to point out that the guy in charge of the testing at the time said under oath neither he or Davey were fired for actual violations. Of course with Warrior there was so much other stuff there, but within 18 months, Davey was back, and consistently pushed for the rest of his life, only when the screwjob with Bret got in the way was there a blip.
If you're going into the "salacious" rumors of the time like those, then by then Shawn was one of Vince's "boy toys" and thus did have some real stroke. He totally could have said "I'm winning cos I can...and if you don't do it, the consequences will be bad..." There is a lot of bullshit and rumor. To say Shawn didn't have power in late 1997 is wrong, he could call his spots...after all this is the man who to that point had only jobbed a title clean to Sid and Jannetty, one as punishment. Even from 1992 and that first IC title, Shawn didn't lose titles...he got suspended etc...
The bottom line is that Davey in 1992 was as over, if not more so that Shawn and could have been the #2 guy in the WWF or even got that push Bret got. Warrior's release and the roid trial put paid to it. Had it all not kicked off to that level, sure you could argue Hogan would have still been there, but if he was "passing it on" then Davey was the template... big, charismatic, a great worker and with the burgeoning PPV business in the UK, money... Vince didn't want to nuke Davey cos those PPV gates were GREAT business and would have grown... the window was lost but ultimately the WWE is still there cos of the change of direction in 1992/93.