To be clear, Price would not skyrocket, it will collapse when average block size nears 1MB, and remain collapsed the longer the 1MB limit is left in place. Left in place eventually another coin will take over.
No this is not logical to say. Another coin would take over as a highly transactable commodity, but to say "take over" is incredibly vague. I am suggesting such a low size renders this "commodity" like gold, and this would have an incredible utility in relation to our current financial system. This is the issue I see, people want bitcoin to be both a fundamental basepoint and a highly transactable material. I suspect it cannot be both, should not be both, and won't be both.
Are you sure, that at such a low block size, bitcoin is worthless? I suspect that the only true issues with price is uncertainty. And so once we solve this issue, this will change.