I'm going to have to go with Earnie & Angela on this one.
Popularity extends far beyond record sales and concert sales in this country. In this thread there have been a few recurring band names mentioned along with INXS... Crowded House, Midnight Oil, Cold Chisel etc. The reason for this is there are a handful of bands who managed to transcend the music "buisness" and become a part of the culture and ethos of the country. This is so drastically removed from US ideas, that unless you actually live it, you can't quite grasp it.
As much as I think INXS is over rated, there is no doubting their immense stature within the country. When they played out Wembley, they pretty much sealed their place in the countrY'S folklore, like the America's Cup win, like the Olympics announcment etc.
Sure in 1997 they had the drawing power of three year old, but people sure cared a helluva a lot more about Michael Hutchance & INXS then they did about Savage Garden, who were the most popular thing at the time.
A further example of how popularity transcends charts in Australia. There is a song by Hunters & Collectors called Throw Your Arms Around Me. This song was released as a single, twice - neither time did it crack the Top 40. Yet it recurringly is voted the best & most popular song ever written by Australians... And I can gurantee Earnie, Angela and any other Australian on the board will know it line for line.
No one is disputing that INXS were not the "it" band in 1997, but they were carried by their, (deserved or not) terminal popularity, which they will have forever.