- Have devastating effects on the fee market
Since there's more space in each block, this space is now less valuable, fees might not be zero, but they'll be lead down to the minimum and competitiveness for fast transactions will be dead.
I don't know how it would change the fee market.. There hasn't been any scarcity in blocks before so fees would probably stay quite similar to what they are today. If adoption continues to increase, the total of collected fees will be higher as there would be more transactions per block.
Wrong. Some scarcity in blocks, and some disparity in the fees paid is essential to maintain a healthy economic relationship between the miners and the users. More tx volume just recreates today's dynamics on a larger scale. As the block reward subsidy diminishes, the extent to which that subsidy was distorting the fee market will become increasingly more apparent. When the block reward approaches zero, having a functional fee market in place is the only way of incentivising miners to mine at all.
You are describing a theoretical construct, while uxgpf describes (current) reality. So, it's pretty arrogant to tell him, that he is wrong.
You state a theory as a fact, so you don't have to describe what your theory is based on. It at least doesn't seem to be based on current events.