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That's a pretty awful argument.
VOOT - not sure what the sub category should be, but it is definitely the best of some genre.
Action is a very broad term but I'm not sure how limiting it to games where you can only perform one confirmed hit before every enemy recovers makes any kind of sense. Maybe if you're just trying to specify "slow action games."
I don't think I would call (real) Strider "slow," but it would be alongside Castlevania, and both are clearly distinct from the Double Dragon and Bayonetta style(s).
edit: I agree that "Action" is broad, but it collapses on itself somewhat when you let many of its potential entries fall into more specific things like Beat 'em Ups, Run 'n' Gun, etc.
3D arena fighting? It gets a lot of labels and is an awesome game, and while some people classify it just as a fighting game (which I can easily see) I feel like it has enough distinctions to be at least somewhat separate.
For 4+ player fighting games Anarchy Reigns is definitely the best there is. I wish they'd put it on the PC considering that platform is dominated by trash like Gunz, so it would be nice having a real game for some competitive action (plus the console online scene for that game is pretty much dead). Granted, even on console it's mostly crap like Wu-Tang, VO Force, Smash Bros., and Powerstone 2 so it's not much better there.
Nothing collapses. That's how genres are supposed to work.
Rondo of Blood is good, but Shinobi III is better. Shinobi III has deeper technique. I'm optimistic that someone, someday will make an action platformer that equals or exceeds it. I think the Crazy Viking Studios guys are getting pretty close. Volgarr and Shinobi 3DS show what they're capable of. They clearly understand what makes a great action platformer.
As far as rail shooters go, Panzer Dragoon Zwei probably won't have much competition because few people are interested in making these type of games anymore. Sin and Punishment is pretty great but Zwei has the virtue of having simpler, more elegant mechanics. And Zwei's story is so elegant and beautiful.
Jet Set Radio pretty much has the free-roaming graffiti genre nailed down.
And recent efforts to duplicate the Deus Ex formula suggest that no one will probably ever beat Deus Ex in the FPS/RPG category. Vampire the Masquerade: Bloodlines comes very close, in spite of all the bugs.