Although I think your overall point is valid I wonder whether there is a middle ground on the hardware. For many purposes offering a degraded service would be

Although I think your overall point is valid I wonder whether there is a middle ground on the hardware. For many purposes offering a degraded service would be better than nothing and could perhaps be handled with 1.5x your needed resources rather than 2x. It may also be possible to make use of this fabled cloud to take the 0.75x resources you have left after an outage back up to 1x. All this does add development time though and, as you say, for most sites it isn't going to be worth it.