They don't count against the cap.Another reason is I think translators count against ownership caps.
There are no multiple ownership limits on the number of translator and booster stations a single entity may own. Nor are they counted as FM stations for the purposes of the primary station multiple ownership rule, 47 CFR Section 73.3555. See 47 CFR Sections 74.1232(b) and (g).
The FCC won't do away with AM, but the marketplace will. It's not attracting new listeners, and the FCC has shown no real desire to prop up the service other than handing out translators like TicTacs. Not to mention many municipalities are making it harder to locate new tower sites through onerous regulations, and many operators finding that it makes more economic sense to sell the land the towers sit on to developers and turn in the licenses.
Also, how many FM translators even mention the AM they rebroadcast? Most are identified as "ESPN 107.7" or "Hot 92.9" or whatever. Except for the legal ID, the average listener would have no clue that the primary signal is actually an AM station.
As far as the HD on a translator, I'm not an engineer, but aren't most HD stations getting less coverage in HD than their analog signal? So, if you put HD on a translator that covers say, 10 miles, and the HD only gets you 8 miles out, that's a sizable loss.