What about Marian Keyes? She writes contemporary fiction that's massively popular. (But I haven't read her book with the trans character so I've no idea how she treats them... she's not been cancelled so I assume she is uncritical. Or maybe just not been caught out.)
Also, literary fiction (which is generally not about showing off) may be a small market but it's hugely influential in terms of where the conversation goes, so I wouldn't underestimate it. Also I disagree that SF/F or YA are small sectors - they are huge, and growing. Most people have heard of JKR, George RR Martin etc. There's surely a lot more money in that than cosy cupcake/seaside tales (I have to admit complete ignorance of those genres so maybe I'm underestimating the market share - just going by the bestseller lists, I would expect to see a lot more YA and fantasy).
I don't know. I'd like to think you're all right and I'm seeing stuff that isn't really there. But I still see it. Trans has captured publishing and bookselling almost completely - I can't see how books themselves will be unaffected.