I think removing gloves would favor grappling in general because strikers would be less likely to headhunt at the cost of breaking their hands. We'd probably see a bump in RNC finishes. As far as why it seems like "BJJ is not prevailing", a few thoughts:
It IS dominant. EVERYONE knowns submission and submission defense. Those who don't, get subbed. This isn't the 90's where a sizeable fraction of the competitors were ignorant of submissions. The world knows that submissions are deadly. But offense is harder than defense, everyone knows defense, so we see less terminal offense. This doesn't mean that sub grappling isn't dominant, just that the playing field is more level.
The far larger problem is the wrestling/takedown deficiency in submission grapplers. If you can't take your opponent down, a guy with good defensive wrestling and decent submission defense can keep the fight playing out on the feet. I don't think gloves do much here.