I spent the last year or so plowing through the entire series (sans non-canon games like Gaiden) and I can tell you the series has always been a sequential escalation of camp and stupid. They dial it back every so often (Revelations 2 being probably the most successful before 7) but people who got upset at what RE4 had done to the series must have been asleep when RE2 came out. RE2 was very much the Aliens to RE1's Alien. It was RE2 that really opened the floodgates for survival horror's golden age, with a long string of imitators, some of which came from Capcom themselves. Has the emphasis on action diminished the RE series? I suppose that depends on what you expect out of RE. RE6 is definitely the culmination of a lot of stuff that the storyline had been building up for years -- escaping a house full of mad experiments is a far cry from narrowly averting a global-scale zombie/mutant apocalypse.
But therein lies the problem. Let's be honest here: survival horror as defined by Resident Evil and Silent Hill had hit a wall by the mid-00s. Long-standing complaints about clunky controls and a perceived lack of innovation had put the genre into a bit of decline. While the western games industry had made their own attempts with the likes of The Suffering, Manhunt, and The Thing, among others, none of them had ever really made a dent -- even System Shock 2 was more popular as "best horror games" fodder than it was as a game anyone actually played. RE4 (and later, Amnesia) changed all that, for better or for worse.
I know some lament the death of old-school Alone In The Dark-style survival horror, but I wouldn't blame RE4 for that. Capcom saw where the wind was blowing regarding the genre and the franchise and made adjustments. Their gamble paid off for them big time. It's important not to understate how influential RE4 was on multiple levels. The over-the-shoulder view completely revolutionized third-person shooters. Everything from Gears of War to Uncharted to Dead Space has utilized it -- I don't know that there's a TPS game, survival horror or not, that utilizes Max Payne-style cameras in this day and age. Whatever you might say about RE4, OTS has been a good thing, a decent compromise between third-person and first-person.
Amnesia, I think, is a far greater villain in terms of asking what "ruined" survival horror. The I-have-no-hands-and-I-must-wank subgenre of first-person horror games where you can't defend yourself is, in my mind, the logical opposite of the direction RE4 took horror games in, but it goes too far by taking agency out of the player's hands entirely. Even Clock Tower, ever the love-letter to slasher flicks, gave otherwise-powerless players contextual methods of self-defense. Unfortunately due to LPers like Pewdiepie making Amnesia popular, there was a period of time where your choices were either the likes of RE4-5-6, Dead Space, etc. from AAA developers, or the indie scene's Running Around In The Haunted Whorehouse Without Even Like Picking Up A Goddamn Fireplace Poker Or Something 2: Gaiden. The industry knows there's no room anymore for games like RE1; though a few indie devs have tried to recapture the concept (Lone Survivor for example,) Capcom re-releasing HD versions of REmake and RE0 served no real purpose than keeping a couple of their classics alive and accessible, and taking advantage of the hype for RE7. But make no mistake -- RE7 is not RE1. RE1's controls are clunky, its reliance on static camera angles is confusing and sometimes deadly. RE7, like Alien Isolation before it, is the perfect marriage of what Frictional tried to do (use a first person perspective for greater fidelity of control and greater immersion) with traditional principles of survival horror (limited resources, dangerous combat, etc.) while avoiding the sticky issues of lack of player agency (Amnesia) and poor controls (RE1.)