1.) Why is it ok to remove the button - because hardly anybody uses it.
2.) Why does Firefox removing the button not meant that "RSS is dying" - because people who currently use RSS will keep doing so, just without using the button.
Your second point is flawed. The button makes using RSS more convenient. Removing it makes it less convenient. Saying people would not be "put off" by making it less convenient is naive at best.
1.) Why is it ok to remove the button - because hardly anybody uses it.
2.) Why does Firefox removing the button not meant that "RSS is dying" - because people who currently use RSS will keep doing so, just without using the button.