I believe MLB management agrees with you because they're considering testing moving the mound back a foot which would give hitters more time to react and should help balance the strikeout rate.
They are considering it, but I don't think there's a ton of evidence that it will balance the strikeout rate. It will probably decrease it, but would also possibly increase walk rates as well as potentially increase SP injury.
The drop in batting average is primarily due to the increase in strikeout rate. Homers are down, but it's the K rate that is the problem. This is a problem because pitchers are better, but also because analytics has taught that strikeouts are the pitchers best friend, while homers are the hitters'. More attempts to hit homers mean less "2 strike swings" as players used to be taught.
The optimal strategy for both sides is for pitchers to go for the K (increases K rate) and for hitters to try and hit the homerun (also increases the K rate).
Sure those are two of the three true outcomes that the pitcher and hitter have the highest degree of individual control over, so how are you distinguishing that the K-rate is the issue compared to the HR%, which as you noted, is also down? From my POV the hitters optimizing for launch angle (long fly balls instead of lower-trajectory line drives) is just the other side of the equation from pitchers throwing hard and going for high K-rate.