Not only are you on the money, Erik, but many music critics agree with you, pointing to "Swordfishtrombones", I believe, as the turning point or, more apt, the point of no return. My Waits collection includes early albums as well as more recent recordings. His vocals on his early albums are strong and smoky but then this drunken, Dante-esque persona took hold and instead of using it until it played out (David Bowie and his Ziggy Stardust persona, for example) he held onto it until he ran it into the ground. I can't tell you how many times I listen to more recent Waits recordings and think, "Goddamn, that's a beautifully written song but I wish someone else would handle the vocal chores."
It is important to bear in mind, however, (if my sources are correct and I have no reason to doubt them) that one part of the Waits persona that is not contrived is the drinking. He is a world-class drunk. Put a musical genius in a recording studio with a case of rye and you get what you get: a perambulating drunken monkey with a calliope in the background. Sometimes it works, more often it doesn't. But, for balance, look at songs like "Beautiful When You Dream" and "Tom Traubert's Blues" ... priceless. I mean, how many of his contemporaries are writing waltzes? None, that's who. The guy writes beautiful waltzes, for fuck's sake. If Waits is not a musicologist, he certainly should be bestowed with an honorary degree.