So many people have different opinions. I won't push mine on you, but ask you to just consider my observation.
The Dalai Lama didn't make this decision frivously. Doesn't Buddhism teach that we should relinquish as much attachment to the world and its material things. Isn't that what Buddha did in 400BC -
Bhudda gave up his politcal thrown as prince/king and spent about 40 days in the wildness, praying and fasting. He was tempted by the devil/demons and refused all their temptations. After 40 days he returned from the wilderness with the formations of pure Bhuddism... no political power.
Isn't the Dalai Lama giving up something that Bhudda gave up long ago-- political power and wealth, leaving him to return to, and concentrate on, the pure way, for which he was born.
He will always be a king of his religion and his people... that is why the Chinese want to refuse his abdication... they are not stupid - the Dali Lama is going back to the pure way and will be stronger for it than ever.