The problem didn't start after the red's war. The problem was that they didn't evolve with the times, disregarding mortal technology because they can't use it, being set in the same ways even though the world population soared. The fact that Justin found and secreted away two council level young wizards (and strong ones at that) is an indication of how weak the council's hold on the mortal magical community became. And that was a few decades befoe any wars. As you said, there isn't enough of them, and they're too arrogant and snobbish to call for help or change how they operate.
Maybe Harry doesn't think they're obsolete, but I do. They keep getting hit, and not replenishing their numbers or adapting fast enough. The only thing they're doing efficiently now is killing warlocks, and that just deprives them from future resources.
I'm not saying that they're not important. Their mere presence makes many predators think twice before considering mortal prey. But it's not enough.
There was more than just the war with the Reds, their numbers were diminishing before, true.. But I don't think technology is the reason, their numbers were going down since before the tech revolution.. It isn't that they disregard technology, they flat out cannot use it, for whatever reason. I really think if Harry could think of a way to block his effect on computers and other things he'd use it. Even when being out of it and examined with an x-ray it usually doesn't work and that is an old technology.
Harry is the only wizard that openly advertises, he gets hits but how many of his customers actually believe he is a real wizard with real earth shifting powers? Very few, and even when the see it with their own eyes, many still don't believe it.. The world has changed, true, belief systems have changed, vanilla mortals have their own kind of wizardry now, no need for a guy or gal with magical talent no matter how great.. Or unless you cross one, they don't even enter the mind of your average vanilla human... So some retreat and die, kids with talent and their parents are not informed of the dangers of that talent going untrained or that they are even dangerous... So like Molly, thinking she is helping her friends by going into their mind, she does, nearly destroying them and sending herself down a dark path in the process... If not pulled back in time, the Council has no choice but to give them the chop, the Merlin is right about that.
Obsolescence means something no longer fits the times, something better has come along.. Perhaps that is true for wizards, but kids are still being born with talent every day and get into trouble with it.. As long as that is true, there is a place for the Council and it's Wardens..