Knowledge is power.
Proud resident of Sarlona. Player of "Gilgimesh the Steel Demon".
Challenges are still relevant to some of us.
Not only am I getting items I can use out of the heroic challenges, I actually enjoy playing them just for the sake of playing them. Some of us even dedicate character slots to it (e.g. see this and this for ideas). For me doing a challenge well feels like a different experience than running a quest well, so it adds some variety to my gameplay. The XP is just icing on top for me, but once or twice I have belatedly found myself at the XP cap on my level after doing a bit of Challenge running so if anything it is more than I would expect.
I realize that the level capped crowd does not get much out of them and I hope that gets corrected. I would definitely vote for a way to convert epic materials to heroic materials, and a level cap increase on the epic challenges. But I feel that it is not accurate to declare them dead in general.
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