The time has come to make a decision. Do you want the current user base as it stands, or do you wish to shed users? If you wish to shed users, then make a stand, post up where you see this venue going, and make public your choice. It's called repositioning. Happens all the time in business. The management decides to take the organisation in a new direction, pick a new market segment, and take it from there.
You do not have to serve everyone. You may make decisions, and you make those decisions on a commercial basis for you are a business. But understand this - you are a business. We, the journal holders, are customers. People are going to act like customers if you treat them like customers. You may sack customers. You don't sack community members, at best, you ask them to leave.
Decide if SixApart is the steward of a community or just a business? If you're the steward of the LJ community, come back to being part of the community. If you're a business, then start being a business. If you're no longer happy with fandom as a target market, quit the marketplace. Be clear that really, you don't want fanfic, or fanart, and that you'd rather those were posted elsewhere. Make a statement. Tell people what you want to see in a customer, and see whether they chose to stay. Make offers. Make a pitch. Sack a few clients. Be honest, be upfront, and see where the money lands.
Just get on with it, and do it whilst you still have customers to sack, because I doubt you've got much of a community to rejoin right now.
[ETA: Feel free to link away to this post]