With all due respect, doesn't this make the case to have alarms automatically processed to the 9-1-1/Dispatch center if the AHJ decides that it would be safer to do so? Technology allows for many ways to automate the immediate transfer of all signals (alarm, trouble, supervisory, secure) so not only can the first responders be dispatched right away, but the AHJ is also very aware of the level of compliance for the occupancy at any given moment. The pending changes at NFPA this month will eradicate this possibility whereby the AHJ will have no choices in code compliance. The ability to "select or elect" anything but Central Station goes away. There is a lot of competition to make a direct connection to the 9-1-1/Dispatch Center happen, and there are great opportunities for a public-private partnership to provide optimal response. The case you cite is not uncommon at varying degrees of delay and outcome - some never reach the lawsuit level. 
    I am sure that the central stations have plenty of reasons why direct communication from alarm systems to 911 centers are not, and shouldn't be,  the wave of the future.  
    But let's first get the facts straight because the central station in the story got a bad rap.  There was no 2 hour delay in dispatch; the dispatch was immediate.  The delay was in the alarm detecting and notifying the central station, and that's not the central station's fault.  
    Another interesting comment you make is that NFPA is making changes and therefore AHJ will not "no choices in code compliance".   Isn't that suggesting that the tail is going to wag the dog?  AHJ makes the code, which may or may not adopt some version or parts of NFPA.  
    There are a few jurisdiction that employ "fire districts" and monitor direct.  I don't know how they are doing compared to other jurisdictions that work with the alarm industry and the central stations in particular.  We do know that in Illinios the fire district was successfully challenged.  In Westchester, NY it was not and the municipality monitors fire alarms.  
    Most central stations are professionally operated and properly train their personnel.  Most fire alarm companies are competent [well not according to some of the fire alarm experts out there, but competent enough to pass AHJ inspections].  I suppose a municipality that decides to monitor fire alarm directly will take the time to properly train its personnel.  My guess is that the municipality is going to spend a lot more money and resources providing monitoring services than makes fiscal sense.  Probably a good opportunity for more patronage and graft, and taking jobs from the private sector.  I don't know how the municipality jurstifies the expense and undertaking.  It's not likely it will be able to rely on governmental immunity when it engages in business in competition with private businesses.  Lot of issues to consider and it may take some time to sort themselves out through the court system.  
    But to address the issue directly, I don't believe municipalities should be in the monitoring business and I think the model of installer and wholesale central station, that system that has evolved, is working pretty good and should be left as is.  We've already introduced self monitoring into the mix.  Let's see how that plays out.