There was an article in Marketwatch today that claims a strict interpretation of the 4% rule would have failed already if you retired in 2000. I have not verified the numbers and don't plan to. My main take away from the article is "Don't be stupid or blind to changing conditions."
http://www.marketwatch.com/story/why-buy-and-hold-is-a-bad-idea-for-retirees-2016-03-17
By my calculations, a Y2K retiree with $1mm in a total stock market fund and using a strict 4% SWR now has about $356k (inflation-adjusted). Definitely not looking so hot. It's following a similar trajectory to a 1973 retiree that technically didn't "fail" by the traditional definition but just barely made it. Scroll down to the "Retirement with a 4% WR" chart here.
However, putting all of your money in the stock market isn't the only way to invest in retirement. A retiree with a 60-40 portfolio split between VTI and BND has $638k. A retiree with the Coffeehouse Portfolio (also 60% stocks and 40% bonds but constructed differently) has $1.03mm. Someone with the Permanent Portfolio has $1.04mm. You get the idea.
Not all portfolios have done poorly since 2000, and understanding how safe withdrawal rates actually work opens up lots of attractive possibilities. IMHO, dismissing passive investing in retirement just because one single investment option is struggling completely misses the point of how diversification and asset allocation works.
Considering that neither VTI nor BND existing in 2000, (they were started in 2006 and 2007 respectively) I don't know how you can reach any conclusion about their value today. I assume you mean Vanguard Total Stock Market Fund and Vanguard Total Bond Market. But, honestly, I'm tad skeptical just seeing fancy charts, and not the underlying data.
When looking back it also important to look at what portfolio options were common and not just what investment options were possible. Vanguard Total Stock market was only started in 1992 and had the only fraction of the assets in 200 it has today. Neither Total Stock Market or Total Bond Market were popular options in 401K in 2000. At the Schwab didn't have total stock market fund until the mid-2000s and total bond market option until 4 or 5 years ago. Total Stock Market is still not an option for the government TSP fund.
The coffeehouse book was written in 1998, and I first heard about despite reading all the investment boards sometime in 2003. I can't imagine any prudent person retiring in 2000 sticking their retirement money in portfolio recommended by an obscure newspaper columnist in a book that had only been out for a year or so.
So for all intensive purpose when people talked about indexing in 2000, that meant A S&P 500 fund and some combination of bond and money market funds, CDs, and Treasuries.
Last I looked (circa 2010/2011) the permanent portfolio, did, in fact, hold up well. As did 50/50 portfolio of Vanguard Wellesley and Wellington, so these were a viable alternative, but far less popular in 2000.