I understand that, but what happens when we have, say, 2000 transaction requests every 10 minutes, but the system can only process 1000 transactions every 10 minutes because of the block limitations? And say that that number of transaction requests is consistent for a week straight. Then you have tens of thousands of transactions backlogged, that may never be processed.
Am I wrong?
A few things...
I believe the maximum block size can be increased, so more transactions can fit into a block. The max size is low(ish) right now to prevent malicious entities filling up people's hard disks with huge numbers of small transactions.
As Bitcoin becomes more popular and there are more transactions, fees will become more prominent, so you'll have a way to prioritize your transaction if its necessary.
There could be alternate block chains for more localized or specialized spending, with large processors/banks/merchants settling out via the block chain periodically. Perhaps the use of services like MyBitcoin will become more widespread. When sending transactions internally, no data is written to the block chain. They could also settle debts between each other outside of the block chain, through some other communications channel.
Basically, there are lots of options for growth of network usage.