I can only comment as someone with relatively recent experience with the school...
It is going to be very difficult for the school. A relatively small cohort of students (approx 150 per yr), with no additional intakes in years 9 or 11 mean that what they have in year 7 is the maximum number of potential rugby players that they have in year 11/12. The school is obviously deliberately focused on academics and also other extra curricular activities (music, arts, drama, etc) and has the strong support of all parents for this focus. This combined with a very clear and openly stated position on scholarships means that the starting base of players is not as strong as other schools and doesn't get supplemented in later years (again, very much supported by the parents).
In the short time I have been there, I have seen the numbers of kids (and importantly also parents) who have an interested in rugby is declining, mostly at the expense of soccer and truth be told, this is what I also see in club rugby. The problems are all then quite circular in that there are less kids interested, so less teams, which usually means weaker teams, which means they often get badly beaten, which leads to any'swing voters' leaving rugby, which then perpetuates the problem. One other very obvious problem is that of injuries. With less depth in numbers, they probably have a disproportionately large impact when compared to other schools.
The rugby community at the school is very keen (as is often the case with rugby communities), the effort and commitment of the coaches & staff is good, and the kids give it their all (sometimes amazingly so in the Opens, where I am often amazed at how much they put their bodies on the line against kids who are 1 year away from professional rugby / league contracts), but it simply doesn't have the resources (players, facilities, grounds, etc) to compete with some other schools. The best way I put it to people is that they are "school kids playing rugby", not "professional rugby players at school".
As I have mentioned in previous posts, the best outcome would be a school rugby association merger, whereby schools could be matched up appropriately so that boys who wish to play rugby can continue to do so through the school rugby program.
I know it would horrify some people (and would have plenty of logistical issues), but I have often wondered if a school rugby association merger was never going to eventuate, would it be better for schools in a similar situation to become SJRU accredited clubs and play in the club rugby system, perhaps in the 13-16s age group and come back into a school program for Opens? It certainly would allow younger teams to be graded more appropriately, hence the negative cycle described above might be broken.