That, I would agree with, but they still would have needed to replace the Taurus with something larger, keep the Escort, and not launch the Focus... otherwise a 2000 Fusion would have the same problem as the 2000 Contour, it's pricing structure. At the low end, you could buy a fully loaded Focus and at the high end you could buy a similarly equipped Taurus. Most people tended to buy a loaded Focus or a decently equiped Taurus over the Contour.
But when you look back at 2000 to say what they should have done, you unfortunately have to look at what the management af Ford was like back then. Ford was in the hands of Nasser. He was also busy spending billions on Volvo and LR. Looking back at his tenure at Ford, it seems that he had a simple plan. Ford would be the truck division, Mazda would be the entry level car with Volvo taking the rest of the slack. Lincoln would have been the upscale division, and Jag, LR, and AM the Luxury trio. All of Mercury along with Ford's cars would be gone. Had he stayed there another year or so, this may have been the face of Ford.