We should be looking at this as an opportunity. This move should finally kill any unrealistic dreams of Melee returning to MLG, or of Melee even returning to its post-MLG glory days. We need to get serious about this, and the hard truth seems to be that Melee is well on its way (and in many ways, already is) to being a side event.
That may dound like defeatism, but maybe we can re-adjust our priorities from "saving Melee" to "maintaining Melee." We continue to fight a losing battle by going head-up against Brawl. The majority of people have spoken: they don't want to play our game anymore, for several reasons that we really can't do anything about. Instead of trying to convince new players to join the Melee ranks (which simply is not going to happen), we should focus on developing those players who have stuck with Melee, and turn our attentions inwards. Honestly, Brawl being picked up by MLG shouldn't have any bearing on what we do, because in reality it doesn't affect us at all. If MLG hadn't picked up Brawl for 2010, would they have picked up Melee? We all know the answer to that.
Let's make Melee a small, close-knit community where, by virtue of our size (or lack thereof), we're a super-competitive and highly skilled group. Brawl being picked up should be the deathknell of our delusions of granduer of returning Melee to its place as the preeminent Smash game, because that wasn't going to happen regardless of MLG's decision. Let's take this moment to re-evaluate and change course, stop fighting an enemy we can't defeat and make Melee the best side event it can be. Melee is only going to contract from here as the remaining players age out, so let's make the best of it.
As a sidenote, I think our only hope for expanding Melee (or at least Melee-style gameplay) is Project M, but that's a post for another day.