I don't think the Internet killed packet radio. The slow speed of packet radio killed packet radio.
At 300bps on HF and 1200bps on VHF, AX.25 packet was never designed to carry a lot of data. However, that didn't stop folks from putting up BBS's and it didn't stop BBS users from flooding the system with large emails and binary files. I never did keyboard-to-keyboard packet, but those users were probably the ones using packet as it was intended. That's not to say that you can't move data via packet, but when you consider that a simple Microsoft Word document consumes thousands of bytes, you just can't use packet the same way you use the Internet.
Nowadays, the BBSs seem to have disappeared and many of the digipeaters are gone, too. In some areas, keyboard-to-keyboard is still active. And, there's still APRS, which I think is growing.
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