IMHO most of the problem is in Vic, Sa, WA, too many kids are lost to footy.
In NSW/QLD, if you're not a specific body type (ie, if you grow a neck) you're ruled out of going anywhere with rugby/league pretty early.
In Vic/SA/WA almost any kids with half a shot at footy are going to dedicate to that; the pool is much smaller.
That's a good point, though I think you underestimate a little bit the potential pool size for rugby league/union. Certainly there are more body sizes and more dollars to be made in AFL, but NSW cricket still loses a few to the rugbies.
On a side note, I'm talking up NSW's efforts, but Tasmania is even more impressive. The amount of high-level domestic and international cricketers they produce is incredible for a state if their size, and all the while they also churn out footy players. It really is remarkable, they must have some bloody good systems in place.