Is it your contention that modern musicians write Clasical minuets and Baroque fugues which are in some cases better than the best of the older works that are still listened to, but that no-one cares because much of the value of those works is in their role in a canon?

Depending on who you're considering to be doing the caring and not-caring, this may very well be an apt description of the situation. But the main point I would make is that these are student exercises. Writing works in older styles is a skill that one learns in school; it's very much like how math students are asked to re-prove theorems of Euler or Cauchy. You may be seen as a genius if you rediscover the proof of the fundamental theorem of algebra, but nobody's going to give you the same kind of credit they give Gauss. Likewise writing a really great fugue in your counterpoint class isn't going to make you Bach. Part of the reason is that Bach already did this stuff (so you're not in the "canon"), but also when Bach was doing it it was at the frontier of musical thought, which it isn't today, as evidenced by the fact that it is taught to undergraduates. Whereas Bach's challenge was to be as inventive as possible, today's students have to be as inventive as possible while still sounding like eighteenth-century music, which is a challenge of a different kind, and will tend to produce different musical results.

I could easily believe that in those cases, but I simply don't believe it in the case of Opera. The Opera cannon is just not very large. Some people have heard the whole thing and only like a few dozen operas.

First of all, the total number of operas written since the form was invented (something like 40,000, if I recall correctly) is much larger than any single human could plausibly have heard. You must be talking about the active repertory of famous opera houses, which is indeed probably something like a few dozen. However, there are good reasons apart from artistic merit to expect that the number of operas in regular production would be small: namely, staging an opera is typically a very costly and laborious undertaking. (So is composing one, by the way, which is why doing so is not a typical student exercise the same way writing a fugue is.) This will push toward conservatism in repertory selection, with companies sticking to the pieces they already know "work". There are all kinds of obscure operas by great composers (such as Handel) that have only recently begun to see the light of day for this reason, and being by such composers, their artistic quality is quite high. If folks want more old operas, there's plenty of digging to be done (and it's being done).

It should really be pretty easy to do a controlled experiment with a naive population to see how common it is for modern artists to be able to impress an audience as much as their 18th and 19th century precursors did.

It would be very hard to find a truly naive audience with enough musical ability to make the results of interest. Best you could do would probably be musically gifted children who had been deliberately kept uneducated in music history. (Then you'd have to ask what the appropriate age is, etc.)

That said, if it could be done, I'd be all in favor of doing it. My prediction would be that there wouldn't be much of a difference between the perceived "impressiveness" of actual Baroque fugues and the best imitations of Baroque fugues from today.

I guess that my major reason for holding the contrary position was largely because modern musicians and composers, more than painters and authors, are the results of university education and I fairly strongly suspect university education of destorying artistic ability and distracting artists with intellectual games that simply lack the merits of the fields that the academic subjects are derived from

Let me be clear: this absolutely does go on, no question. But it probably goes on in all fields that have university departments -- including (as you note), math, and yes, the empirical sciences. And my suspicion is that while it may give mediocre practitioners of a field the illusion that they're doing better and more important work than they are, it doesn't actually stop the best folks from doing genuinely high quality work. (At least not all of them.)

However, if that's your theory, what then do you think of European "modernist" composers, who are similarly "inaccessible" but have less association with universities?