So? They shouldn't play the World Cup because hardly any Swedes will watch it? Those who enjoy it, which is a number dwarfing the number of fans in Sweden, will probably survive.
It doesn't matter if the tournament creates fans in Sweden. The IIHF World Championship doesn't create fans in Canada, no one is suggesting that it hurts hockey and shouldn't be played. The tournament provides entertainment for those who wish to watch the best players in the world playing for their national teams. There is no proof at this point that the World Cup comes at the expense of the Olympics, and there are rumblings that participation by the IIHF could help entice the NHL to participate in future Olympics.
The marginalization of the WHC in North America historically is purely the fault of the IIHF. In reality, the first Canada Cup played a role in the growth of the WHC in North America, as in fact the NHL and the IIHF made a deal that the NHL (Canada) would agree to have players at the WHC and the IIHF would endorse the Canada Cup. The Canada/World Cup was a direct factor in leading to NHL participation in the WHC. I guess fans of the WHC should be grateful.