Bitcoin won't break $500 a coin, likely will sit around the ~$250 range with occasional jumps over $300 and below $200.
People need to start comparing Bitcoin to other payment methods, and they will clearly see why Bitcoin will never have enough demand to "go to the moon," most of Bitcoin's current users are speculators that have no clue what they are talking about.
Bitcoin's biggest issue is that is not consumer friendly: Buying Bitcoin is time consuming (and costly when you figure in fees associated with acquiring Bitcoin + risk of volatility), very slow (to reach 6 confirmations takes several hours... lately its been taking ~1 hour to get even a single confirmation), no ability to chargeback (this is NOT a plus), and other hassles (security issues, learning curve etc). The only thing Bitcoin is better than using the dollar for is to purchase illegal goods.
You present a sound argument but the illegal goods aspect is also illegal services and which would incorporate lots of gray area type markets such like u say, I dont expect bitcoin to become the next paypal, but perhaps in a tier just below for anything not 100% white. I'm thinking even craigslist type exchanges bitcoin could very well become the standard of
At least at the moment there aren't many strong alternatives and bitcoin does have a certain ease of use lacking in other payment forms.. For one no account - wallet takes 30 sec to generate.. Also on the fly payments.. The confirmation thing I have noticed is highly dependent on the wallet used to send. I have been using mycellium lately and its almost 100% of the time 10 min per conformation