Miners incentives in mining blocks are NOT aligned with node users and leaving them the decision as to what size the block should be inevitably leads to an ostracization of low bandwidth nodes. The centralizing effect is undeniable.
I am afraid you are mistaken.
Low bandwitch nodes will exit the market the same way as unproductive producers exit any given market under free competition. It's a mechanism as old as markets. Do you see a centralization of production in market economy?
The fundamental mistake underlying your assertion is to assume that because there is a selection process it's somehow undermine competion (needless to say that competition is the essential decentralization force).
Both (selection process and competition) can exist at the same time.
The peer-to-peer network is not a production market.