In my experience, after a certain time, once they have enough customers for themselves, master reseller clients move to dedi. Because from a customers perspective, master reseller hosting lacks some benefits that can be crucial when you have a decent client base. Such as root access. If you have 200 sites under your MR, providing support without root access can be time consuming and your clients may not like it. That leaves you to only possible option - a server.
In ithis perspective, if a provider can plan it good enough to maintain a healthy environment on the server, yes, it is profitable.