Western Union will be replaced for sure, because they can't compete cost-wise with the entirely free infrastructure of Bitcoin. Though it remains to be seen how fast. WU can lower their margins and slow down customer drain.

In my opinion omnipresent possibilities to shop with Bitcoin would be a huge leap forward and would actually speed up adoption in the remittance market as well. The reason is simple: If you don't have to convert your Bitcoin anymore to buy things, a whole step in the remittance process becomes obsolete and any conversion fee will be eliminated. There will be absolutely no remaining economical difference in global vs. local transactions.

So the key to Bitcoin succeeding in remittance is the same as for Bitcoin succeeding in general: Acceptance by businesses (esp. brick-and-mortar businesses).

ya.ya.yo!