Sounds a bit like all the VB Classic guys moaning about VB.NET. I joined in a bit myself (mind .NET 1.0 was pretty bad) but now quite happily work in C#, VB.NET and VB6 - whatever makes the customer happy.
Many thousands of VB programmers (hundreds of thousands?) bridged the gap and a great many work in both versions just like me. It just is not a problem.
Most abandoned Microsoft. Or better said, Microsoft abandoned them. Choosing to release an incompatible set of new languages with no upgrade path was hint enough that Microsoft had purely it's own interests at heart and not that of the lowly VB and ASP developers who made their OS and web server successful. Most took the hint and are now happily supporting Java, Ruby, PHP, Python and Perl web apps (with a side-business supporting VB6 legacy apps and ASP - apparently still alive and kicking after all these years) -in short, anything non-proprietary.
"Fool me once; shame on you. Fool me twice; shame on me." For Microsoft, no second chance.
I think MS misjudged its audience there (a rare stumble for them). Visual C++ people thought of their work as code and expected to have to change it for a new version. For them the transition to managed C++ or C# was natural. Visual Basic people thought of their work as documents and were as surprised as if MS had released version of Word that couldn't read documents from the previous version.
I have never heard or read a VB programmer describe his work as a _document_! No, the problem was not how "Visual Basic people thought of their work".
The problem was that VB.NET was a completely different language from VB6, with the full consequences therof: no upgrade path for existing code, retraining of all personnel, etc.
On IIS the upgrade to ASP.NET required purchase of a new IDE (Visual Studio) for all developers and retraining of all personnel, (ASP required no IDE). And ASP.NET abandoned support of VBScript which was by far the most popular ASP language.
The "document" might perhaps be how some VB programmers conceived of their code - as a totality not just a collection of code lines delivering an algorithm - but perhaps you are right and this is not an idea that you can take very far.
I am not sure that I agree that VB.NET was "completely different" - different yes, but still clearly a dialect of Basic (of which there have been many - and some new ones popping up all the time). I suspect that you overstate the difficulty in migrating from one dialect to another - sure it is going to take time to reach similar levels of productivity but time and languages move on - it's something that programmers above all should be glad to embrace.
On your final point - ASP.NET does not in fact require the Visual Studio IDE. There are many advantages to be gained from the IDE but it is not a requirement and there are many texts around that demonstrate development outside of VS. OK VBScript was coming to the end of it's life but in any case it's client side (browser) utility was very limited and something more powerful was certainly needed server side. Oddly - the next generation of VB.NET will include a dynamic option - son of VBScript perhaps?
Many thousands of VB programmers (hundreds of thousands?) bridged the gap and a great many work in both versions just like me. It just is not a problem.