For the most part I think we're on the same page about the FXR/Dyna progression, so I think you're brain cell count is OK. 
The FXR was designed by Buell and his sportbike-fan design team for the reasons stated, but you're right about the market pushback--a lot of HD "purists" didn't like the side covers and the visible frame members. The FXR frames were much more time consuming to assemble. From what I've read, the FXR frames were all hand-welded from many more small pieces in a jig as compared to the Dyna frame (fewer, larger pieces that better lent themselves to automated welding processes). Hence, greater manufacturing costs for the FXR. It would stand to reason that HD would question 'why build a bike that costs them more to build when their customers don't like it anyway?' So the Dyna was re-introduced and both Dynas and FXR's were built for a while until the FXR was discontinued after the 1994 model year. I wasn't until later that folks other than true enthusiasts started realizing just what good handling bikes the FXR's really were. Buell knew what he was doing about lightness, rigidity and efficient power transfer. Look at photos of the XR-series HD racing bikes and you'll see the FXR-type frame. He was a racing guy, but most HD buyers weren't and still aren't.
You're right that most HD buyers prefer style, so the Dyna was a win-win for the moco--give the buyers what they want for less manufacturing costs. More profit for HD.
I haven’t followed Eric Buell’s career that closely, although it is my understanding that he began working for H-D in 1979. I believe that the FLT and XR750 chassis technology predate Eric’s career with Harley; the FLT being introduced in the 1979 calendar year; 1980 model year.
The FXR platform is a takeoff of the touring platform. This is similar to the 1971 FX platform’s relationship to the 1970 FLH. The FLT (touring) and FXR frame share similar construction of platform specific components. I would be very surprised to learn of a substantial cost disparity between the FLT / FXR frames during a time when both platforms were in simultaneous production. The FXR CVO’s are a different animal. I’ll bet that the non-current status of these frames made them very expensive and labor intense to build; quite possibly the most challenging aspect of producing that machine.
We may disagree here, which is ok, but I don’t believe that the production cost, relative to the FXR, was a driver in the development of the Dyna. It wouldn’t surprise me at all to learn that the Dyna cost as much or more than the FXR to produce and support. There are factors beyond the frame itself to consider; for example, producing a common FLT / FXR frame vs. the resources required to develop and support a new proprietary frame and powertrain for the Dyna platform.
It is expected that a well run manufacturing company will continuously explore methods to leverage new and existing technologies, with the goal of reducing development and manufacturing costs. “More profit for HD” only happens when everything comes together into a product that is embraced in the market.
I agree that the FXR frame is a rigid unit and that it makes a fabulous looking custom but there is something very attractive about the minimalist look of a machine without a lot of framework showing. Think of it this way; how would we look if our skeleton was uncovered and visible on the outside, loud and proud for all to see? Some of us might look across a crowded room and say “WOW…that girl’s got bone!” I prefer to leave a little of that to my imagination. Not what you’re thinking…cut it out.

djkak