Well it's been a few years since I worked with it but at the time it was slower than wireless for one, I'm talking about the fast ethernet replacement speed parts not something simple and dead slow like X10. The good chips were controlled by pretty much one company and several patents but that looks like it's freed up now. Regardless the chips ran hot and sucked down a lot of power. Also they were limited in the amount of bandwidth they could use due to FCC conducted emissions rules, basically how much junk or modulated traffic they were allowed to stuff on the power line intentionally. At the time maybe 5-8 years ago they were lobbying the FCC to try to get more bandwidth allocated to them.
Then yes the tech was fairly closed back then so that was a little discouraging. Cost was another big factor it was cheaper to use a wifi module than a homeplug device. Of course there was a major shift from desktop to laptop, phones and tablets that all demanded wireless (hard to believe there was a time I had ethernet cords snaking over the top of my couch for our laptops :)
Now past that is a tricking little problem in the US about hopping phases. Your house get's 240 from the street and splits it at the panel into two sides of 120. Well the modulated signaling of power line communications can't really bridge that gap and there were all sorts of solutions such as having an electrician install a bridge in your fuse box... Or using wireless to hop.
But now you see it's starting to get more complicated. Manufactures don't want to saddle their wifi routers with the not insignificant cost of power line networking, so it's non standard. What you ask about range, could be fixed with multiple wifi routers working together, of course it could be fixed with two home plug devices too, but either way this is a problem for a small subset of users.
Overall it just didn't find it's place in terms of cost, performance, customer wants. There were some cases our marketing told us about that really wanted this for instance older all brick structures in Europe they said or other buildings that a wifi router had trouble penetrating, still though we had trouble justifying price for the equipment to build a powerline backed wifi network. Technically of course it could be done :)
That's the faster stuff, we also looked at exactly what you are talking about for slower speeds, and there were more options there as well although they were also hampered by the split phase problem. Then once you get outside the home it's difficult to get very far since it's hard to get through giant transformers. Inside the home what you say can be done, and is in fact done by smarthome (and probably others) next generation of X10 type equipment. They use a X10 like backbone and compliment it with lowspeed wireless to try to improve the network reliability of both.