I think there's more to it than that. There's certainly a factor that it can't gain traction because of the small number of people willing to have a flash-bang go off in their hands while shooting a carry-sized gun.
It needs to be in a non-carry-sized gun to not be unpleasant, and that makes it a really fine walking-around jack rabbit slayer. With heavier bullets and longer barrels, not a bad antelope-size game getter, but then you do get into legacy products and handloading hard cast. I probably would have picked one up along the way if the 115gr Gold Dot had been available at any point after I started noticing the cartridge.
.32 H&R matches 9mm velocity for bullet weight and with 115gr Gold Dots or equivalent would likely be a much better fit for the defensive mission. I came really close to buying a couple SP101s so chambered before prices got silly. So you can probably lay some blame for the poor acceptance of .32 in the modern era at the feet of magnumitis and velocity worship.
Lately, I've talked myself out of being interested in these .32s by having a .38 SPL octagon and a .357 bull barrel, both 10 inches, for my Contender. Also have a CVA Scout in .300 BLK for the short/light single shot long gun mission. You can even load up the 90gr .309 Hornady XTP for the CVA and have pistol bullet terminal ballistics at pistol bullet velocity with reduced loads. Add an accessory, and it's the ultimate trash-panda-removal tool. I can't figure out what I'd do with a .32 that I can't load up for one of those barrels, and they'll do a lot more besides.