I think two things affected the modding community: one is, as you said, definitely the tightening reins in an attempt to monetise additional content post-release.
The other, which I think had begun to take effect well before the propagation of paid-for DLC, is simply the spirally complexity and cost of game development. The chief time expenditure for any major mod has always been asset creation (while I fully admit what separates good mods from bad is still overall game design). In the past, a couple of talented individuals could roll out a mod in a couple of months that looked as polished as the original game. Now as engines allow for far more detailed graphics, high quality asset creation takes significantly longer. Thus the dev cycle for mods has increased just as for the original game.
For a handful of bedroom coders, putting together larger teams has generally been found impractical so the result is that the best-looking and most promising mods still have smallish teams and end up in limbo for years, during which many falter and disappear. The alternative is a cheap-looking mod which is unlikely to garner significant interest.