Personally, I prefer the second narrative. The first one seems like a bit of a straw man argument, and not very descriptive of the actual life of most churches. Oddly, I've been a member of nine different LCMS churches, several in big cities, two in really little rural towns. None of them are in danger of "dying." A church following the second approach cannot be dying, because there Christ is present, giving His good gifts that sustain life, not just for this life, but also for the life to come.