There was no rewrite that killed the company. There was an attempted rewrite that went nowhere, but the company was killed by IE4 being good enough and free.
Was it successful for Netscape the company, or for the eventual users (MANY years later) of Firefox? I agree with you on the latter, but the decision makers at Netscape need[ed] to be concerned about the former.
Sometimes rewrites are necessary, but they have to be driven from necessity, not simply from the desire to "start fresh".