You're mostly right. The main problem is that manufacturers chose to ignore the spirit of the US CAFE fuel economy regulations, and instead build everything bigger and bigger. That's why quarter-ton trucks grew to the size of the F150 in the year 2000 when they were quite a bit smaller before.
It's not the fault of the regulation. It is the fault of the manufacturers and to an equal extent, of consumers for preferring gigantic vehicles.
And let's not let GM off the hook for the 1990s Suburban, which began to, quite literally, dominate the roads. Those fuckers were the original huge grocery getter, and they had truly awful turning radius and blind spots. You just couldn't drive them safely or courteously if you tried. So of course everyone wanted more powerful and bigger vehicles to compete.