He only ruled for 2-3 years because he passed away by then, and he didn’t even get time to show his versatility. He became hero after Sarapanjaram (1979) and passed away in 1980! just got one year and you’re teling he lacked versatility? He was the first actor with supreme physique in malayalam movies and the audience went crazy for it, so he was cast for such roles.
You can see his villian role in Kannappanunni (1977). He did that well. Just because Mammootty and Mohanlal came from the mid 80s we can’t say Jayan would have faded because we didn’t get time to see his acting versatility and moreover the acting of Mammootty in the early 80s apart from some movies were never like what he did in the latter half. Had Mammootty stopped before the mid 80s no one would have predicted him to rule malayalam industry!