Thirdly, what happens when the price of GAS gets too expensive and the network becomes uncompetitive ? One of 2 things:
a) other smart contract networks start appearing which are more competitively priced and featured (since they have the advantage of watching the mistakes in the first one)
b) the Ethereum network simply issues more GAS tokens to lower the transaction fee to a competitive level (that's my assumption but better confirm this as I'm not quite sure about how this mechanism works)
GAS is just a way to represent the cost of transaction independent of ETH price right? If ETH price increases too much, to let's say $1,000, it's possible to reduce gasPrice, so I don't see this scenario you describe of the Ethereum network becoming uncompetitive because of ETH price.