Thanks for that post, as it was a fun read. A sad one, and I can sympathize with much of it, although you pre-date me by about 10 years. I got my start cutting my teeth on trying to assemble the 1984 Fleer set, and I went through a similar cooling period during later high school and college years.
The developments came on through the 90s with all the new companies entering the field, and that is when I turned out the lights, because, like you, I couldn't find any satisfaction in trying to attempt any collecting goals with the incredibly high number of sets, variation cards, chase cards and the like. Then it only got worse into the 2000's with the additions of 1/1's and 1/50's etc...impossible. And who really enjoys "impossible?"
But that is what turned me back to vintage. Those card populations don't change! And I don't have to worry about what color variant of the 1962 Willie Mays Topps card I need!!!
Now, the grading thing for me - I took a different attitude about that. For me, the grading became a necessary evil to keep up with. The reason for it was the escalating costs of cards that you mentioned. My thinking since I got back into collecting in 2003, was this: If I am going to spend this much money on a card, I want to make sure that it's got a good chance of holding the value I am spending. Meaning, I want to make sure it's authentic, and I want to make sure my $x if going towards a card that everyone (not just the dealer or myself) think is actually the NM he says it is, and that it should be worth close to $x. I don't know if that makes sense, but I approach the grading from the perspective of protecting and ensuring value since I am spending money on a card. It is upsetting because here's the flipside of my thinking: I wouldn't even CONSIDER buying a raw card of any worth anymore. I mean, with all the doctoring going on, the uncertainty of online buying, etc...why on earth would I bother buying an ungraded Lou Brock rookie??? That makes no sense to me. I'll need to shell out the same (or maybe a little less) money for something that may not be as good as I deserve to get for the purchase.
And that is sad. Because there is definitely a part of me that longs to collect raw vintage sets, and make checklists and have fun readng the back of the cards....but much of that is long gone for me, and instead I have a group of good looking investments that are part of the game that I have loved since a child.
It is different.
No doubt.