I don't think downloads killed the re-recording business. But the re-recording business has always been on a knife edge, simply because film scores are a very niche market and production costs are shockingly high. Unless you're re-recording music that has mass appeal and will sell a billion copies, you are going to lose money.
With shrinking interest in film music, a shrinking music market in general, the imminent death of the CD as a mainstream music distribution format, increased production costs, and yes, free and fast downloads... well, re-recordings are doomed. Absolutely dead. It's simple economics. From a strictly business perspective, they have been obsolete for probably something like twenty years - but Tadlow and a handful of others are keeping the pilot light on with a mixture of love, blind faith, self-financing, and robbing-Peter-to-pay-Paul-style financing initiatives. That can only last so long.
These Conan discs are among the last major projects that we will ever see - I might go as far as to say they are the last major projects we'll ever see. We'll get two or three more from Stromberg and Morgan, and that will be well and truly that.