Its possible to achieve those ratings again...but extremely difficult.
Ten years ago, when the Attitude Era was starting and ratings were booming, we not only had those Monday Night Wars that people always attribute it to, but we as a society were also different. People like to blame a lot of things on technology and whatnot, and its ridiculous how they do, but this is one case where you can actually blame something on it. The YouTube/MySpace era is making it so ALL media is changing, some for the better, some for the worse.
Think of it this way. Rose-colored glasses come into effect when people talk about how "TV was better back in black & white because everyone watched it". Some like to argue that the Andy Griffith show was fantastic because everyone from that era was a viewer...but they neglect to think that, back then, you only had maybe 10 channels. If you didn't watch Steve Allen, you didn't watch anything. The less competition, the more people focus on you. Now, we have literally almost a thousand channels to choose from on top of YouTube and MySpace entertaining people. Naturally, numbers are going to be down from 10 years ago when there was less competition.
There's also the issue of talent. WWE is lucky enough to have a large number of insanely gifted individuals, but they have a tendency not to show them off. This Monday's Raw in England was one of the few times in recent history where the show revolved around wrestling as opposed to promos. Its insulting to the fans when they watch and half the time is plugging a new t-shirt in the middle of a mic segment, talking about "shop @ wwe.com", the new King of Kings dvd, the new ppv, the song you used on the ppv, etc. Then there's all the recaps of what has gone on in the past 3 weeks, and they run those recaps on all 3 shows. If you miss an episode, oh well, they'll show me half of it on Smackdown and ECW anyway. If someone is popular, WWE either runs with it or kills it completely. In the latter case, why should someone keep watching? If someone started getting into WWE in 07 because of Kennedy, why would they watch now, when Kennedy isn't even on, isn't being pushed, isn't being given the microphone, etc? Then there's the "Cena issue". If an overwhelming amount of the noise you hear is a negative response, maybe cut the guy's screen time down a little bit so the fans aren't just in a pessimistic mood for half the show. WWE needs to push someone when they're popular, make someone popular when they aren't, and show more of their product as opposed to their merchandise.
Its possible to return to higher numbers, but not by continuing the way they're running things. The phrase "if it isn't broke, don't fix it" works in the reverse. If its broken, fix it. You can't fix a problem if you continue using it the way its being used without tweaks. If you want consistent 3.5 numbers, don't change a thing. If you want 4's and higher, make some changes. If it fails and you get a 1.9, then you know you did something wrong, so you do the opposite. For instance, if you see that right now, you've got a 3.5 average. You give less screen time to...idk...let's just say Umaga. Then you find out that your ratings have gone down to a 1.5. Massive failure. So what do you do? You give Umaga more screen time than he had when you had 3.5 numbers. If that works and you start getting 4 and higher, then you know you made a good choice. If there isn't a change, then that's not the problem, something else is, so change something else around. WWE needs to take a few risks now and again, as 2 oddly bad episodes aren't going to make you lose a large chunk of your audience (unless its just really THAT bad, and if that's the case, you know its Creative's fault), but 2 oddly amazing episodes might gain you some long-lasting notoriety.
BTW OrtonIsLegend, that is one hell of a sexy pic of Kelly Kelly in your sig lol.