Why is HC so dead?

Well no, it's not dead per se. Just that the player distribution numbers were released recently and it works out to, approximately:
50% Domination
26% Nemesis
22% SC
2% HC

SC is easily understandable, a fair few of my friends chose to stay on SC for various reasons. Not the least of which was "no way I'm going to start over, look how much net worth I've built up." Domination I also understand - it's the ones who don't mind starting over, regardless of gear, and the ones who don't have gear anyway. Doesn't hurt that they came out with release, and it's the default league for new characters.

The SC/HC divide has always favoured SC, and SC is a good playground to learn the game in. But think about it for a minute. The Nemesis/HC divide does not at all look similar to the Domination/SC one.

I submit that the primary reason for such an inequality is simply this: HC players already accept the necessity of starting over every so often. There is significantly less attachment to a given character, knowing that when it dies, that's it, game over. Thus, "starting over" is less of a barrier to players who favour the HC style of play, and a greater proportion will head over to the new league(s). 

Good or bad? I don't know. I'm not sure anything could be done to raise the population on HC, and to be honest I'm not entirely sure I would want to. A general population increase would work. However, it's too early to tell if that would even be necessary, since I predict a number of new players who start in Nemesis will eventually stick with HC, where their characters end up after the league ends, and where items such as Voll's Devotion and Shavronne's Revelation are available for greater build-crafting variety.