Rugby supporters prefer TRC, Bledisloe Cup, Super Rugby and even the NRC. If you have a business and don't listen to the strongest core customers, you're doomed to fail.
Sevens is fast, unstable and unpredictable, can't base the game with that. Sevens supporters are few and unstable as the game, a real rugby growth should be based on XV.
Expansion means widening your audience, player base, supporter base and media coverage. At the moment the 15 a side game in Australia has a small audience, a small player base, a small supporter base and very little FTA media coverage. As a business, rugby is as close to broke as you could get without being out of business.
Hardcore, rusted-on supporters won't like 15 a side rugby less because of 7s, they'll all still watch tests, super matches, NRC and club rugby exactly as they do now. Some of us will do so and will also watch 7s. Like p.Tah, I'm a late convert to 7s - even though I played it a bit in my playing days, I paid little or no attention to it as a spectator. In the last couple of years I've started to watch more and more of the World 7s - and I've found it much more absorbing than I thought. (On a wet Easter weekend, it was fantastic)
Money simply cannot buy the coverage that the Olympics will bring, particularly if Australia win a medal in rugby 7s. Domestically 7s rugby is growing much faster than 15 a side games - it's the perfect introductory form of the game and suits males and females and can be played in areas where there isn't a lot of rugby knowledge. It's also quite easy for people who haven't been watching the game for 30 years to understand.
The Olympics are the biggest sporting event in the world and they bring exposure to a worldwide audience, with all the commercial opportunities that that brings. Rugby in Australia can't afford not to focus on the Olympics every four years.