I never meant to suggest that the Thera eruption ended the Minoan civilization right there and then... It certainly didn't.
I didn't think you were trying to suggest that. Many people believe it, though - along with "peaceful matriarchal utopia," "Atlantis destroyed by the Thera eruption" is one of the most common myths about Minoan Crete, and like Daeres, I want to make sure those myths don't gain currency here. I have a somewhat proprietary interest in the Minoans, for reasons that are well known to you.
I agree with your assessment that the Thera eruption caused, or more likely contributed to, a long-term decline.
And my point about unification was meant to address the population issue that you mentioned. A united Minoan polity with multiple urban centres answering to a single central authority strikes me as a somewhat better position from which to start industrialization (if we ignore the myriad of other factors pitted against them, of course) than a far-flung, decentralized colonial empire ruled by various feuding statelets.
In Crete as elsewhere in Greece, though, the terrain makes unification difficult. Greece in OTL was only unified from outside. Hmmm, I wonder if it might be possible to set up a Rome-Greece dynamic in which Minoan Crete is conquered by a stronger and more cohesive but less culturally advanced empire, which then proceeds to incorporate large amounts of Minoan culture into its own. I can't think of an empire in a position to do that - Assyria and Egypt were too far away and too civilized, the Hittites weren't stable enough, and the Mycenaeans, who did adopt a good deal of Minoan culture, weren't an empire.
Maybe a politically unified Mycenaean culture would do the trick, although again, there's the problem of terrain and the ingrained city-state political structure. Or maybe the Minoans, or more likely a daughter colony, could somehow survive the Bronze Age collapse, and then influence one of the developing Iron Age empires. But by that time, the Minoan colony might not be very Minoan any more.
I wasn't even aware there were people who insist on romanticizing the Minoans in such an absurd way!
They surely do. I think I've read every published novel set in Minoan Crete (for reasons that, again, are known to you) and there's a distinct subgenre which portrays the Minoans as a pacifist, feminist culture with virtually modern politics and ethics. Quite a few of the authors seem to believe this is actually how Minoan Crete was.