What ways could the GBA micro have failed? Only two ideas come to mind.
No closing screen, unlike the GBA SP; lack of screen protection. My friend's GBA (Original) had it's screen screwed up one day because it was in his pocket. If this had been a GBA SP, then whatever happened to the GBA's screen would have happened to the GBA SP's exterior and not it's screen. The GBA Micro's screen is just as exposed as the GBA Original's. So... yeah.
No backtracking. The time the GBA Micro was released some GBC and GB games were still liked. No backtracking. This point however, I'll work with.
If the GBA Micro may have failed because of no backtracking, then think about this. The amount of worthwhile GBA games nowadays, compared to the amount of worthwhile GBC/GB games back then, is a very large difference. I wouldn't doubt for one minute that anyone who has a DS also has a GBA game they enjoy, or are currently playing.
You realize this "back then" you're talking about was the end of 2005, right? The GB/GBC games haven't really lost anything in the past two years. They were old news then and they are old news now (that not to say I don't love them to death of course). Backward compatibility on the Micro would have been nice, but it isn't what killed it. I don't think the screen's "scratchability" had anything to do with it either.
1. The Micro costs more (at least at the time of release) than an SP. You're trying to convince people to spend more money to get a tiny Gameboy that can't do everything that the slightly larger & $20 cheaper version can.
2. Fear of tiny screen. The Micro's screen is tiny tiny tiny. Now, it's resolution is very high and if you play one you'll quickly realize that the small screen doesn't hurt anything. The games are just as enjoyable, but a lot of people complain about the sizes of larger screens on the DS and whatnot and all Nintendo did is give them more to complain about it.
3. Non-existant faceplates. One of the selling points of the Micro was the changeable faceplates. However, in the US (and maybe Japan too) the faceplates never existed. If you bought the original Micro you got 2 more faceplates. The only way to ever get more was to buy a whole new Micro that came with a different one. Even then, most of those special Micros were Japan-only (like the limited edition MOTHER3 one

)
4. No connectivity. This sorta goes with #1 because it refers to removed features. You cannot use any link cable with the Micro. That means, you can't play GCN games that need a Gameboy with it, and you can't even trade Pokemon.
All that said, I own a Micro and it's one slick device. I'm glad I have one (although I wish even more than my NES SP wasn't broke

) I refuse to play MOTHER3 on any other handheld (GB Players are ok though

) because they all lack the beauty and elegance of the Micro and a game like MOTHER3 deserves to be played on the most beautiful device available (or the biggest TV screen available).