You know Kevin, this is a good question.
The accordion and harp are very expressive instruments, perhaps more so than the melodica in it current state of use. [What people do with a blues harp is out of this world, and the accordion has huge tonal variation and the ability to play big polyphonic chords and bass accompaniment.] How can the melodica compete to capture listeners? It is not easy.
I would have to say there is a sound difference. That counts, however, the difference is not going to steal the show. Then there is the simplicity of primarily playing single notes and intervals. Less can be more in the right setting. In a live performance, the melodica has a unique look and rarity that make it somewhat of a novelty and attractive (its fresh and new to many people).
If I am just listening–and not watching a show–I think the melodica must compete by accentuating its unique sound (especially if EQed in a professional way) and by playing a unique role in songs (single note melodies and arrangements that fit the song perfect). Of course harp players and accordionists are also fitting their instruments into songs perfectly too.
A much as I EQ my melodicas, I also enjoy playing them acoustically or without EQ.
Augustus Pablo’s sound is somehow pretty captivating. He has good bands behind him, and that helps, and the melodica fits right in to the dub and reggae groove and instrumentation. Plus his melodies are pretty unique because of his musical influences and perhaps other things that were influencing his playing if you know what I mean. So Augustus has done it. He capitalized on the unique sound of the melodica and plays some simple but captivating melodies. In spite of some sloppy playing, mistakes, and weak sound projection, I still like to listen to him play.