I think the actual market is just ordinary electronic currency, probably at least initially to underserved markets such as the unbanked or underbanked, dysfunctional financial systems, high risk businesses (even if completely legal), etc. That doesn't necessarily mean a super high volume of transactions for coffee or on-chain gambling. That stuff was and is likely a dead end for Bitcoin and Monero too. Occasional transactions for important purposes are fine.

The idea of a transparent ledger is a bizarre construction that only exists because it was the first "decentralized" way discovered to solve the double spend problem. It is very counterintuitive to people and businesses that their transactions are visibly broadcast to the world, and many (will and do) reject the concept. Bitcoin will continue to suffer with fungibility crises because they are really inherent in the model of a currency on a transparent blockchain being half-baked. With each such crisis, appreciation for Monero will grow.

They may or may not care about being spied on by the NSA (nor Google or Facebook, though in this case they probably want some controls on it), and I suspect mostly not. Thus we may not appeal to the hard core anarchists, conspiracy theorists, terrorists, etc. unless the robustness against such adversaries can be improved, which is unclear.

None of this means that Monero in its current state can't be improved, nor that it will be. I now expect Monero to be around and actively developed for at least 5-10 years, at which point it will likely look very different than it does today.