I have to respectfully disagree with most of your thesis. I think you're looking at the sanctions too much in isolation from the overall battle between Russia and the western world.

In my opinion, Putin made probably the dumbest mistake in modern warfare by invading Ukraine, and Russia is going to lose most of its influence in the world as a result. So that's my "meta-view", but let's take a look at the details.

First, let's look at one of the key elements: the war in Ukraine itself. Russia had built up one of the largest conventional armies in the world and this was one of its major threats to other countries. But the foolish decision to invade Ukraine has allowed the west to engage in a proxy war with Russia with none of the losses of personnel that would have typically prevented a united front among western countries which are notoriously subject to "loss of appetite" for war with even small numbers of casualties. Now the west is systematically dismantling Russian military power and even making it look like a joke in the process.

Russia is now engaged in a grinding war that they are going to slowly lose, and Putin can't pull out without risking being overthrown as a result of the humiliating defeat involved. I've actually often wondered if the west didn't slow walk some of the military aid at Ukraine at the beginning just to make sure Putin was still optimistic to the point that he committed enough forces that he couldn't pull out early and declare his "special operation" had achieved some false victory. The rapid increase we see now makes me think that my early assessment of US strategy was correct (although the US military will never admit it, of course).

So let's move on to the second arm of this battle, the economic one. You're assuming that the sanctions were to stop the war. If that were true, it would be fair to say that the sanctions have failed, since of course there was never any chance that the sanctions would stop the war: if nothing else, Putin could never stop the warn based on the sanctions and save face, and once again he would come up looking weak. But what if you've completely missed the real aim of the sanctions?

The real effect of the sanctions, intentional or not (and again I believe the intention was there, because there are some smart people in State department, despite the incompetence of most of our elected officials), is to weaken Russia's status in the world and its ability to project its power into the world. The Russian government has been a thorn in the side of the western world ever since the Soviet Union era and is directly responsible for a lot of the current problems around the developing world.

Russia's actions in Ukraine gave the western world a legitimate argument for imposing severe sanctions on Russia, and these sanctions have already an immense impact on Russia. If you just look at the dollars from oil & gas, sure, it seems small. But the truth is a powerful nation has to have many types of industry, not just one. It's fine to have a really big source of money from resources, but if you lack all the rest, you're not going to be a major player in the world. The sanctions have already decimated foreign investment in Russia, and that money isn't likely to return any time soon.

And the counter steps by Russia to the sanctions with regard to contracts and nationalization will have destroyed any trust in any likely Russian government for decades to come.

And that's not counting the inevitable brain drain that's occurring as all the smart tech guys leave for a better life. Ukraine was asking for a ban on visas for Russians, but you can absolutely bet on that not happening: it's something the west wants to happen because it once again weakens Russia in the long term.

Again, I think it's a classic case of the US outplaying Putin (I say the US because I think much of the ultimate strategy is led by the US). They played a slow walk game on the sanctions, leaving Putin to think that Russia could weather them without much problem, then slowly tightened the screws after he dug in on Ukraine more and more. Putin played right into their hand.

Russia was already very slowly turning into "first among 3rd world countries" in many respects where its entire economy was predicated on O&G wealth, due to its corrosively corrupt government. But the pace of that decline has dramatically accelerated and the West wins as a result, although the world will all pay the cost in the short term.

My best guess is that once the West has totally crushed Russia's technical economy (which doesn't seem like it will be long at this point and probably has already happened) and the West is no longer benefiting from Putin-based insanity, there will be a strong effort at regime change in Russia (internal/external/probably both). If nothing else, Russia is full of Ukrainians, and one thing that should be very obvious at this point is that those guys can carry serious grudges. The real threat in all of this, of course, is the chance that Putin will pull some really insane move and use nuclear weapons. But I also wouldn't be surprised if there's enough intelligence on that front to detect the beginnings of such an effort and lead to an acceleration of that regime change option.

So, finally, to address your counterpoint arguments about the costs to the West, I think it is important to point out the economic damage, while real, won't be but so damaging on the long term scale. I'll completely agree with you that Germany was stupid to shut down their nuclear power plants (I was very much against it when it happened), but despite such missteps, Europe will absolutely recover (although the US will obviously gain in relative strength during this whole affair due to its strong energy position).

In the long term, there may even be some benefits for Europe in highlighting the urgency for a move to renewables for electric power generation. Gas will continue to be used for a long time for heating, of course, but I suspect its future use will be prioritized in that direction (along with industrial use, ofc), and it's not like all the gas that will get bottled up in Russia isn't still there, ready to be consumed once things change there. Higher prices will also likely lead to more economical use of fuel: as a society, the west has been amazingly wasteful because of its extreme wealth, and it's really a shame how inefficiently and sometimes outright wastefully we've been using oil and natural gas in particular.