So we've identified the problem, an alternative solution and now we need to turn these ideas into $$$!
Red Capitalism Lion Gooooo!
Would a radio station playing a mix of "good" music work? Is radio so far gone as a platform that your audience wouldn't even be aware you existed?
I read recently that a station in NYC that had been classic rock was expanding their library. They still play classic rock but now mix in new rock music believing the classic rock audience still wants to discover new artists. They've had some moderate success.
What astonishes me is the impact TV and film have on bands. A song plays during the closing credits of Grey's Anatomy and the next day they're blowing up iTunes. iPod commercials have great songs you never hear on the radio. If you need further proof, Jeff Buckley's Hallelujah topped the iTunes charts after an American Idol contestant covered it. There are people out there finding good music but it never finds its way to the mainstream unless Trojan-horsed into their living rooms.
You need to find a way to package new, great artists in a familiar context if you ever want a venue to break emerging talent.
And I refuse to italicize American Idol. I'm a god damn iconoclast.