He changed to Blaze Bayley after his entire original band left, and he had to get a new band. He rationalized the name change because he said people didn't know he was doing any new music under the rather vague Blaze name, and things improved after the name change for a while. There was also incompetent management at the time of The Man Who Would Not Die and Promise and Terror, and after that, he hit his lowest point with King of Metal, where he had no band whatsoever and hooked up with local bands in the area he was playing and had them backing him so he was only flying himself. And yep, several albums ago he got Absolva to write/record with him and back him live.
As for your first statement about a third album resulting in clubs...yeah, probably not too far off. They did some slightly bigger venues on the VXI Tour than on the X Factour, but I think it would've stayed about the same unless there was some sort of commercial breakthrough on that third album. Even if the third album was great, I don't think it would have changed much. Besides, Steve had decided Blaze was going to go anyway after the '98 tour. If Bruce didn't come back, he was ready to audition a new singer.