I agree with your assessment of Rush before and after Signals. I still love the late-70s prog-era Rush today like I did back then. But as much as I try to like most of their stuff since then, I can't. Different Rush fans like their later stuff more, so Rush has clearly evolved and thrived in their career regardless of my preferences. I suspect the "magic" is a subjective thing, probably whatever we decide we like in our formative teenage years that gets hardwired for the rest of our lives. New magic for new teenagers each decade?
There may be big differences with the story of Dream Theater's evolution. 1) There's no major change in the industry impacting DT like the emergence of MTV (visual production emphasis, short songs) that clearly affected Rush after their newfound commercial success. 2) Dream Theater seems to be eternally comfortable having nearly no "radio hits" while living off a cult following. 3) The band has more people and more personnel changes over time. So I'm not sure how closely the DT story will track Rush.
JP reportedly loves Hemispheres, and Fragile, but also Master of Puppets. All very cool! I am probably about JP's age, and I can imagine him agreeing with me that most 80s rock (e.g. glam metal) was commercialized, formulaic, silly garbage. Maybe John was like me in that he found a second wave of music he liked later in life, like Metallica. I like metal selectively... a lot of metal is pretty mindless. I like what I hear in the fusion of influences in DT, always very "mindful". I like the tension between the metallic edge and the melodic beauty and the adventurous 70s prog spirit.
I don't dislike ADTOE but find that the songs blur together and nothing stands out like a few past masterpieces. I don't know if it is the beginning of a trend, since it is the first output without the founding drummer. (Metallica started boring me, then Death Magnetic broke that trend.) We'll have to reserve judgment for a few more albums. Some of what I don't like in ADTOE also follows a trend in the few albums earlier that just seemed like a kind of creative dry spell setting in... some riffs a bit repetitive or over-complicated, lyrics becoming less heartfelt and more contrived, singing and vocal melody a little brooding, fewer songs that are upbeat and crisp and energetic, and maybe too much "symphonic sound" sometimes.
Exemplifying some of these points, I am not in love with Falling into Infinity, but to me the best song on it is Just Let Me Breathe. Its riff is not that complex but it is intense and edgy and has just enough metal tone. The singing is rythmic and exciting and "sounds like rock". The guitar solos are very cool and innovative. Sometimes simpler may be better. But I love the epics too. Octavarium is awesome and breathtaking. The key to it is the progression of moods and the cohesiveness of a story within it. The guitar about 3/4 into it is also mind-blowing, not just in showcasing JP's brilliance but also the way it fits seamlessly in the whole composition. I look forward to more of both types of song.
I still have high hopes and expect DT to challenge themselves and keep us interested far into the future.