The network effect only has value when the utility of Bitcoin is better than the alternative. Artificially making Bitcoin less useful (high fees), makes alternatives more useful. It may take years to fully sacrifice the utility of the FMA, but if you do, don't be surprised if your first mover advantage turns out to be just as beneficial as it was to myspace, ashes between your fingers.
Of course there are limits, limits to be decided by miners that expend energy to create blocks. Creating megablocks that choke the network (and make your block stale in the process) is not the greatest concern here. Satoshi understood free market incentives, he designed the system around them, it's a shame to see an arbitrary malicious miner protection measure corrupt them in such a brutal fashion.
I refuse to take fear mongering in the form of government intervention seriously while a few phone calls and door knocks from the PRC would be nearly lights out. WRT major govts, we had/have two options... security through obscurity, or security through ubiquity.
Of course it will be good that the blockchain can also be used to purchase coffee, but there is little meaning in it, since the lower the transaction value, the less trust you need
Similar to existing centralized payment services like paypal or VISA, in future you can use large bitcoin service providers to do zero transaction fee and instant confirmation transactions, if that's the utility you want. I don't see why people would use the blockchain to do it, which is more expensive and slower. The only reason that you'd rather use blockchain to do the transaction is because you are moving large amount of money or have specific privacy concern, in that case you will be willing to pay a high fee