I love this topic, being german born. However, I think its hard to speculate just how good some of these drivers are, I almost fell into the “fairytale” career of Hulkenberg pre-2010, and in 2010 realised very quickly that F1 is a unique sport, and not matter what happens in other motorsport categories, drivers handle the pressure and spotlight of F1 in different ways…
Frentzen was always considered THE best of the Mercedes Sportscar drivers, out of Schumacher, Frentzen and Karl Wendlinger. With Schumi being the 3rd best, struggling to be on par with the others.
As for the reason for the rise in German talent, I think @Cristian has highlighted the significant support the german auto marks play in motorsport. Ultimately though, if you compare the german marks to Ferrari and their history, then maybe you could be forgiven for thinking that Italian drivers should excel, especially considering their domination of the late 90′s, early 2000′s. So I don’t think german automotive support is the sole reason.
Perhaps its all down to the fact that Germany has the best road circuit on the planet in the Nordschleife (Nurburgring). Honing their skills on that bad boy might say something there.
Or maybe its down to the amazing go-kart tracks they have over there, which all shot to the fore when Schumacher shot to fame, bringing into the limelight his fathers go-kart circuit, which use to be humble, but is now a pinnacle of go kart tracks world wide. I know in Australia we have “European Styled Go Kart Tracks”, which is a direct influence of this. So maybe the youth of Germany have better proving grounds in which to hone their craft.
Or finally, maybe its down to the awesome road infrastructure in germany where you can drive on the autobahn’s with no speed limits which require maximum concentration, not only paying attention forward while you speed along in your VW Beetle, only to be caught up by a screaming BMW M3 and having to be alert watching your rear view mirror.
These are just some of the things that I think help all juniors become better drivers… Although I love the Finish license test where you have to do an advanced driving course that teaches you how to slide and control your SAAB in snow ;)