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I have seen projects drown to death in a sea of frameworks, supposedly reusable libraries and generalizations developers deemed necessary. But it was fun for some, I am sure.

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I've seen projects fail for a variety of reasons. A few fall under scenario you described. But, I've also seen quite a few projects succeed by making use of in-house developed libraries and frameworks. It probably more depends on who is on the team than whether or not the code is written to be generic enough to apply to other problems.

e: fixed typo

No doubt that's often the case. And depending on which type of programmer you have too many of, it might be failing for that reason or the opposite (insufficient generalization).

If you ever think "we are on schedule and this codebase has just the right balance between getting things done and doing it right" then you have a well composed team.

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