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I agree with your points actually.
1) That success with Leverkusen was very valuable. Because it was their first ever Bundesliga trophy in team history. Xabi Alonso did it and his reputation increased a lot in his first years of his manager career already.
2) Yeah actually everyone was thinking the same. That season was extraordinary. It is even hard to explain.
A back-to-back title in the Bundesliga and even going for the Champions League would make him the king around here. But I also don't understand the reason behind this downfall. Did the players lose their belief in themselves or what?Yes and there is an important nuance you left out here. He won the title, the first in the history of Bayer Leverkusen. But he did in the most impressive way possible not losing a single game in the Bundesliga and the DFB Pokal, which he also won. It was a record breaking season. Nobody really thought they could do that again in the same fashion. But they were hoping for a defense of the title, which to be honest was somewhat dependent on how Bayern would do because otherwise Leverkusen would have to have played another season that should have been close to their record. Bayern can still end this season with 88 points.