I don't think it'll signal the immediate demise of HTC, not at all. I DO think it'll be a blow to the community, though. History has shown that the more active a community is, the better off the subject matter is.
Either way, there's hardly a magic bullet that'll solve everything. HTC has a legit concern about maintaining what can be a time-sink (OC moderation), and at the same time, they wouldn't have created it in the first place if they didn't see the value of a venting room where people can be silly.
If the O'Club disapears, I suspect the signal/noise ratio in the rest of the board will get a little worse. Nothing crazy, but just something to be aware of. You'll have a lot more off-topic stuff leaking into General and whatnot. That might not be a bad thing, but it'll definately be a real thing.
Again, I sincerely hope that a solution can be found that'll bring this vibrant community back to life, but if it can't, I hope that the posts are made available for at least a little bit so I can archive some of the things that I valued deeply, like my learning to fly thread, the help I got during the Tsunami aftermath, congrats for the birth of my kids, advice for business, and more.