I think any continent removal is bound to drive off players that felt attached to that particular continent and no other, and would thus only accelerate the decline of the player base.
However, continental mergers may be part of the solution, or maybe a solution to other problems at least. Now that we have sea travel, if we merge continents in the sense of having multiple land masses remain intact but become reachable from each other (like Dwilight's two subcontinents), where nobles can freely sail from one part to the other, it'd become easier for realms to find something to do (nothing good to do close to home? All neighbors are superpowers? Let's raid farther away!) and for religions to gain a critical mass needed to become of some importance. In short, a complete overhaul of how continents work. Of course, tweaks would need to be made so that mercenary settings truly allows fighting really far from home, and colony takeovers would need to be brought back.
It may not help the ratio of characters per total land, but if blocs from one continent start trying to destroy blocs from others, they'll likely end up destroying realms and driving a lot of stuff rogue, thus increasing the noble per owned region ratio.
