We pretty much do consider piano playing to be a dead art. You're much more likely to hear recorded music of some sort than a live performance. It's very niche today.
Watching live piano performances has always been niche. The point is that the player piano didn’t replace them, but moreover player piano concerts aren’t even a thing. The human element turns out to be an important factor here.
No it wasn't. Time was almost every British pub had a piano and that's where your musical entertainment came from. All music was live because what other choice was there? The particular form varied by culture of course: mine was more ceilidh oriented.
I dunno, I feel like there's something qualitatively different between pub music used to liven the atmosphere of a venue, where the primary activity is socializing with your friends and consuming alcohol; and art, which is what we're talking about. That is, just because a piano is used to create art, doesn't mean that everything that comes out of a piano is art. I think that applies to Midjourney as well.
But electronic computer music (including pianos) allows us to enjoy many more genres of music nowadays than it was some while ago when only "the elevated" afforded to go to a piano concert.