I honestly think the iron and diamond generators give the game so much more strategic depth, they're a fun concept to play around. Yes most people don't really use them that frequently, since it usually takes long to collect and then craft, but it's a tradeoff since you're leaving your flag unattended in exchange of getting better gear.
Since Bedrock has a 1.8 style of pvp at times I feel like full iron gear isn't even worth it, you get killed pretty quickly and if you're playing against decent players you don't last longer than two fights.
So instead of removing an aspect of the game that has huge potential to make it more fun, I would consider ways of buffing iron and diamond generators. Maybe diamond generators could be a bit quicker & iron gear could be automatically enchanted with protection or sharpness or efficiency. Don't know, just random ideas I had. Fact remains you're right in the sense that not many people really make use of the generators, and if they do the tradeoff isn't really very balanced, so there should be changes made to make resource collecting worth it.
I really don't like the idea of incorporating a Bedwars/EggWars sort of shop into the game, it just seems like a boring solution to me plus having to craft and all adds an extra level of difficulty to recollecting materials.