I am not totally surprised that the tree was bigger in the old days. A tree actually in the middle of a fairway is subjected to all kinds of pressures ... mowing over its roots, fertilizer and chemical applications around it, ball abuse ... that it is bound to be unhealthy.
I also understand all the various reasons why, sooner or later, building around a tree is a bad idea.
But what about sooner? If the tree is going to transform a hole for twenty years before it dies, why not enjoy its twenty good years and THEN solve the problem with bunkering?
I always think about that big elm on the tenth hole at Winged Foot East. My life would be something less if Mr. Tillinghast had cut it down when he built the place.
However, generally speaking, I would rather let a specimen tree defend one side of a golf hole, instead of leaving it right in the middle of all the traffic.