It is really ironic.
The C4 is still one of the most advanced cars on the road considering the volumes of aluminum, light weight composites, and endless wind tunnel design hours.
The C4 can cut the wind like a razor blade, turn corners like a pure race car, and accelerate with the best of the production cars.
With a little tweaking, a C4 can out-accelerate the best of the best, and still manage braking from 60-0 quicker than anything else out there, less a brand new Corvette.
The back bone of the car is the tried and true small block Chevy, and virtually every soft and wear item part can now be puchased aftermarket.
No mid 80-90 car compares in any way shape or form, yet...as you have mentioned they are dropping in value.
It is shocking to consider the window sticker of a 96 Vette at some 39,000 that can now be bought for $12K, and those like myself that have ultra clean refurbished older C4 models that sit for sale for months.
My best guess is that Insurance and the overall overwhelming popularity of the C5 have killed C4 values. You see, all though virtually any 21 year old could swing a $10-$15K loan to buy a good used C4, most can't get any reasonable insurance, so they pass and buy a Camaro, Mustang, Celica...etc, instead.
Will it turn around anytime soon? Who knows?