Doomed? Most people hare happy with LCD quality today.
Image quality might be doomed if technology like OLED doesn't take off and we are stuck with edge-lit LCDs though.
I'm very glad that I had the foresight to buy a full array backlit set when one or two of the companies making them dropped them in favor of edge LED, rather than waiting on the promise of OLED. (because it was already 5 years late at that point)
Layered panels in combination with "localized" edge dimming might work quite well.
I seem to recall Sharp's Mega Contrast 1,000,000:1 LCD using a layered design (this was long before LED backlighting) and that seemed to work quite well
The display only had a peak white of 500 cd/m², so it was actually achieving 1,000,000:1 by having very deep black levels, rather than being extremely bright.
I can't seem to find many details about it now though. The press release
doesn't mention anything about a layered design, but I'm sure that's what I heard back in 2005.
Really though, however
that was achieved, it surely illustrates that LCD contrast can be dramatically improved over what we have today.