Did you forget how much hype this dude got after he KO'd Jardine and Sakara in the first round in his first 2 UFC fights? Jardine had just come off a 1st round KO of Forrest Griffin and also beat Liddell after losing to Alexander. Going into the Silva fight he had 8-1 record.
In the grand scheme of things though you're right, Alexander was more of a flop than a disappointment, doesn't really belong in this conversation cause he never really had much of a UFC career anyways (and made his debut at age 35).
The bolded part of your quote is really why most saw him as having having limited potential. Agreed that he got a good amount of hype following the Jardine KO, but I still think most people saw him as having a ceiling as an exciting brawler that the UFC liked to fill their under/mid-card with in exciting matchups--especially during 2005-2010. Keep in mind, this is around the time when guys 10 years his junior were coming into MMA in droves already armed with multidisciplinary skillsets that he was trying to learn on the fly. I think the UFC saw it this was as well since they matched him up with guys like Sakara and Irvin, before throwing him to the "wolves" (lol) in his bout with Eric Schafer--his first with a somewhat legitimate grappler.
I also think most saw his victory of Jardine as a fluke considering how cocky Jardine approached that fight. Even then, drafting off the fact that Jardine beat Griffin shouldn't have amounted to much considering that KO was an upset as well (one I remember fondly since I cashed in on Jardine being a +350 dog), despite being one of the worst matchups stylistically for Griffin.
Fighter hype back then was often severely out of whack with reality since there was so much information asymmetry due to the lack of footage and coverage of the indy promotions. It led to MMAth as one of the main methods to evaluate fighters and matchups (see comments above regarding Sokoudjou; his stock may have benefited the most from this phenomenon). Also, an appearance on TUF gave a nice boost regardless of the individual fighters actual underlying skillset, which led to even further distortions in evaluating fighters.