I refuse to get into a flame war with you but I will reply to your impassioned post.
Classical Spartan traditions had not died out by 270bce, or so say modern scholars. For example, one recent book suggests that the Agoge is still in operation at the time of Areus but dies out after his reign. There are also the well known military reforms of Cleomenes in the late 200s BCE, the implication being that the hoplite and not the phalangite is still the standard soldier of Sparta during the game timeframe. So Sparta, in the RTW timeframe, still has the military institutions of the classical era.
The calamitous fall in numbers of Spartiates is a complicated issue but its "increasing velocity" is traced back to the earthquake that devastated Sparta in 464bc. Combine that with the constant attrition through warfare; the ease with which someone could be kicked out from the Spartiate class given some infraction of Spartan law (e.g. not being able to contribute to the common messes); the increasing wealth of a small number of Spartan landowners (the myth of the common allotment of land given to each Spartiate, the kleuroi?, is now believed to be a reform of Cleomenes in the late 200s bce) which only exacerbated the mess contribution issues via poverty all helped reduced the number of full Spartan citizens.
It is certainly not because they were all gay. In fact, Xenophon implies there is a seething mass of men who live in Sparta (so Spartans in a sense) but who can never become Spartiates because of the disparity in wealth. These "hypomenions" are involved in some sort of plot to start a revolution. Presumably these Spartans-who-are-not-Spartiates included recently ejected Spartiates and the sons of rejected spartans. There is another theory that these Spartans-in-limbo actually made up the numbers in the Spartan regiments, not the periokoi. That the periokoi were still regimented separately, even up until Leuctra.
But why have the Spartans in a Total War game? That question is almost rhetorical - Spartan society allegedly produced the "total warrior" so it is a no brainer to have that Greek city represented in a ancient warfare game. More to the point, I think the Ancient Romans loved the Spartan myth so why not let Rome have the glory of conquering Sparta. Furthermore, in a game you get the chance to reverse the population decline and implement Cleomenes reforms decades earlier.
Regarding your comment on "psychopathic paedophiles" - you should read Anton Powell's history on Athens and Sparta. He holds that the Spartans acted rationally and with ingenuity in maintaining their state. Moreover all the Greek cities used slaves and the "institutional paederasty" is a controversial stance. Not all scholars believe that was the case. Xenophon himself denies it and he apparently sent his sons to the Spartan agoge. Moreover, the accusations of pederastry can be levelled at the other Greek cities aswell.
I know for a second that I would not have lasted long in a Spartan Agoge and I am under no illusions about its totalitarian nature. However, I am fascinated with the citizen soldier it produced and I remain sceptical about a lot of the negative things said about Sparta. For example, the stories about murdering deformed babies surely smacks of the anti-Carthaginian propaganda about sacrificing babies to Baal?
A few points about that accusation set against Sparta - firstly, a lame Spartan not only became a Spartiate by enduring the agoge but also became King. Surely such a person should killed? Secondly, recent archaeology at the infamous site of infanticide revealed no such remains, just adult remains that back up the claims it was a site of execution for adults. Thirdly, exposure of unwanted infants is practiced in other Greek cities, even Athens.
Now, of course, I know you will have strong opinions and evidence to the contrary but my main point in posting is to show that I am not intimidated by your aggressive stance and there are plausible arguments and evidence that, in fact, contradict your view.
Anyway, here is a laconophile site, which might help assuage your antipathy towards Sparta. Yes, I think it goes too far but it is a useful antidote to having such a onesided view of the laconian state.
http://www.elysiumgates.com/~helena/
PS But I have to be honest with myself. If I met a living Classical Spartan, I would probably consider him an arrogant ******* and immediately join any nearby deep Theban phalanx

However, Spartan citizen soldiers were rightly feared and the system that produced such a successful army is fascinating from an ancient military historical viewpoint.