Honestly, if you have to stick the blame on one person for starting SP 1.0 on the path to destruction and ultimately killing the band, Jimmy's as good a culprit as anybody. The whole band had a 'no drugs' policy by that point after Jimmy's tendency to vanish for days during SD's recording, and he got multiple warnings on the MCIS tour before the overdose that killed Jonathan Melvoin. The band nearly self-destructed right after coming together to make their magnum opus, and that wasn't due to Billy, James or D'Arcy. Things were starting to go well until that happened.
Billy's "my way or the highway" tendencies are also another factor that contributed to the band breaking up, specifically D"Arcy leaving; there's a story that during the last leg of the Arising tour, just before she left, she wanted to do Daydream and sing on it, and Bill shut her down; she was pissed because he'd shit on her for making mistakes, while his own vocals didn't sound that great at times (The '99 Tramps soundboard really does show this in spots). And if I remember right, she was also a good friend of Melvoin's, and there was some tension when Jimmy came back.
As to James, there was an interesting tidbit in the MCIS reissue book that he wouldn't let anybody alter Take Me Down, and was pissed at its placement, that it wound up closing out the first disc (though for the life of me I couldn't picture it anywhere else). You go back to Pisces Iscariot, and there's a long history of relegating the majority of James' songs to B-side status which lasted up through Machina; combine that with all the tensions that had gone on in the band since the MCIS tour and it's understandable he'd be fed up.
To give Bill credit though, there's another story I remember hearing a while back where he tried to acquire or proposed some manner of living space/apartment/house for the four of them to stay in together and learn how to work with each other/become friends again, and James wouldn't have anything to do with it. By all accounts he just wanted to get each show done on the Arising tour done with and move on. And at the end of the last show in 2000, he thanked D'Arcy and basically just left without saying a word to anybody, Bill included.
I'd say Bill probably stuck with them because they knew they could put together great things, he valued their input, knew that they all complimented each other, and - most likely of all - they put up with him just as much as he put up with them. But at the end, they'd all had it. What started as a Corgan/Iha partnership - people forget that - became Billy's band more and more over time. Power struggles, drugs, death (don't forget the girl who died in the Ireland mosh pit), label interference, diminishing returns...it was a whirlwind. Those people all needed to get away from each other at the end.
Machina was also Bill's pseudo-autobiographical account of "A rock star gone mad", and many songs reflect the band splitting up - had he nixed anybody earlier on as you suggest he should have, and moved on with a hand-picked team of professionals, I don't think it's a stretch to say Machina wouldn't even so much as exist. Tension and tragedy made that album, and I don't want to wonder at a possibility where it couldn't even be.
More happy thoughts now: