I think it is dying and very near flatline. People did jump on the wave 1 stuff here initially, but there's no accounting for the sanity of completeists anyway. They also sold well at the TRU half price sale (which is $7 CAD up here) but I can still find any version of any character easily in stores, whether it's the Iron man or Hulk packaging/production changes. Even the Emma Frost clear version at TRU in Fargo wasn't moving at all over the space of two days.
Based on that Fwoosh list it looks like a lot of people are ready for/want Hasbro to dip into the rehash pool anyway. I'm not necessarily opposed to rehashes if they're done well or are a new costume of a character I'm interested in or was done poorly previously. I would have bought several Spidey/villain figures from the movie line because I'm a Spiderman fan like you Brian, but the scale difference was more than I was interested in.
I think they'll run the line for another 2-3 waves beyond wave 1, taking it out until Christmas 2007. If sales don't improve dramatically by then I think they'll re-invent it as something newer, probably in the 5" scale so they can change the articulation and save on plastic costs. I don't recall how long the license is in place for, so they'll do something, but I don't think it will be "Legends".
Scott's right, we are in gravy territory for sure and that's pretty obvious considering we're asking for boxed sets of non-major characters. I think they could have the line run longer though, if they just did things right.
Less X-heavy. And this is coming from an X-men fan. I liked and bought all the X-books in my heyday of comic buying, but filling a line so full of movie figures is silly from a business standpoint, especially 6-12 months or more after the movie has come and gone not only from theaters, but from the forefront of the DVD rentals/sales as well. Peppering in an Xmovie figure and an X-man/woman/villain in each wave would have worked fine. It would have kept interest in the line from the X-faithful but wouldn't have pissed off the non-X fans like Scott.
Better sculpts - half of Wave 1 is pretty good. Planet Hulk, Beast and Hercules are pretty well done. I'm not sure but Iron Man might not be too bad either, but I'm not enough of a fan to judge. I think it looks ok. But Banshee and Emma Frost look like crap. So much so that the petty side of me won't buy Hercules just out of spite alone. It's a cool figure and a good character, but I refuse to buy it because I'm pissed at Hasbro for screwing up the two figures I wanted out of the wave.

ToyBiz' female figures were never spectacular (what happened to Wasp's hair for the regular figure? It doesn't look anything like the pictures in earlier issues of Toyfare.) but this is a whole new low.
Better mixes within series - Look, I know Iron Man and Hulk and Wolverine are popular, I really do. But holy crap people, mix it up a bit, spread it out. I'm (embarassingly) a fan of Wolverine, but there's more than enough of those around. I am a fan, albeit to a lesser extent, of Hulk, but I didn't need another one. And I'm not a fan of Iron Man, so why are you on number 8? Sure, he's popular, but c'mon, it's not that hard to figure out. Here's what I think (and yes, I know I'm meaningless) they should be doing:
Wave = six figures:
1 X-man - good guy/bad guy/villain/female/whatever
1 movie figure - be it FF/X-whatever; if there are two current movies, put those out, one from each
1 Avenger
1 Spiderman related figure - collectors like the ML packaging more than the Spidey line, which was already geared more towards kids anyway. Make this action feature-less and a nice sculpt or maybe a villain or less popular character amongst the kiddies.
1 villain - in addition to whatever may have been above or maybe just a supporting character that's packed at a smaller ration of 1/12 and then up one figure above to 3/12 ratio.
Stop the insanity of certain characters - has anyone counted? We're up to what? Six Hulks; 8 Iron Man; 743 Wolverine; 4 Cyclops; 4 Thor, three of which are in rapid succession.
Bah, you get the point. I've said it all before. It's over, done with. I'm not getting my Spiderman family box set anyway and really all Hasbro is doing is saving me money and possibly my marriage, so how can that be bad?