Indeed i agree that to many dance music would seem somewhat of a cycle as many only view/listen to what hits the charts. U have to remember that a lot of dance music is made souly for the dancefloor and a lot of it hangs around on promo for a while, and only a small percentage makes a full release.
As for diversification of the genre, over the last 10 years dance music has seen many changes, but i hardly think its going full circle.
Back in the early 90's groups such as N-Trance, Snap etc came off the back of the rave era. Then move onto say 98-99 when acts such as ATB etc where hitting the charts with quite progressive trance stuff, which most would consider far to uncommercial for the charts in this current climet (for an example of the look how bad DT8's 'Winter is doin this week).
Moving on from this we had 2000/1 where trance music became a lot more commercialised, with a lot of euro flavour coming in from the likes of Lasgo & IVD.
2002 was a pretty lackluster year, with Euro trance dyin on its arse pretty much after the success of DJ Sammy, altho Forever by N-Trance sold pretty well!!
2003 saw a new form of commercial trance emerging. It wasnt to disimular from the Euro 'cheese', but had a more british feel, with a lot of the old HArdcore tunes being slowed down and tranced up, with Artists such as Flip & Fill etc breaking into the charts.
The public (not including me!) soon got bored ith this sound, and at the beginning of 2004 LMC released TMTTCA, which was the start of all the funky reworkings in a sence, altho funky house had already started to influx in 2003 (tomcraft, benni bennassi etc)
Now in 2005 it looks set that the year will be mostly full of funky house 80's loopy stuff, but how long this will last no1 knows. Even next week Styles & Breeze's Heartbeatz is being released, which will see a more trancier version of an old Hardcore tune being released, but not in the 2003 vein of artists coverin other artists hardcore tunes, but hardcore artists re-working there own tunes to a more commercial scale.
WHo knows where the future of dance music lies, but one things for sure... ppl will soon get bored of 80's looping stuff, so somethings new will pop up sooner or later, and it will be a number 1, then ppl will start copying it etc etc etc...
Its a Funkin Adventure i tell theee all!!