Take my particular niche: Tabletop roleplaying games like Dungeons & Dragons. Pretty small niche, right? Well there are 100s of bloggers already in that space. I'm pretty sure that even the most popular ones are barely making enough to cover hosting. I've dealt with some of them to advertise my site (http://www.obsidianportal.com), and their ad rates are dirt cheap. Believe me: If I can afford to buy ads from them, they definitely aren't getting rich on this.
Plus, blogging is _real work_. You have to constantly come up with new content, engage with your readers, and the rest of your niche's blog network. That crap takes a lot of time and effort, and you can never quit! Take a month off and you've lost everyone. I've seen it happen.