It wouldn't make sense for bitcoin to kill fiat currency since it is entirely backed by fiat currency.
Face it, if you couldn't exchange bitcoins for dollars, not one single person would bother with them. Just go to any thread where someone is scamming/selling something. Everything is translated in US dollar value.
This is only partly true. I personally would enjoy taking USD out of the equation.
I would accept
only bitcoin, period.
But you can't. Price something in bitcoin without looking at the exchange rate to dollars. (You can do it off the top of your head but lets say in 18 months)
Bitcoin just started the wrong way. If it were used for example trading pictures you made, or something else easily produced by everybody instead of buying somebody a pizza it would have turned out very differently. This is a social issue not a economical or technical one.