Well, to some degree, this is true.  However, don't forget that the $10 transaction fee would only be for those who needed their confirmations now.  The majority of transactions would just be delayed until their fee made sense.  If they never made sense, that becomes the economic incentive for the out-of-band parrallel transaction networks and solutions, which in turn reduces the future demand upon the main chain, thus reducing the common transaction fees.  It's just another marketplace, and doesn't necessarily spell the end of bitcoin.  It certainly doesn't imply that a alternative cryptocurrency would take over in bitcoin's place, because the economics of bitcoin and it's desirability as a payment method isn't so easily separated from the clearinghouse service that the blockchain provides.  More likely, IMHO, several solutions that provide for out-of-band transfer networks as well as off network member2member wallet services would fill those gaps; both in the context of subdivisions of the economy (Silk Road and other specialized markets with an internal M2M exchange, already so and pretty much required anyway;  MtGox or Coinbase develops cryptographicly signed digital cheques; some unknown programmer develops an android app that lets users trade in the private keys in some semi-trustworthy manner for use in meatspace) and locales (The Bitcoin Bank of Hong Kong develops a member android app that is widely used in Hong Kong, but not often elsewhere; The Bitcoin Bank of London uses plastic casino chips; etc.).

Most of these alternatives suffer from either a loss of anonimity or an increase in security risks, which are themselves a form of cost to the users; but most of them will have their own place within their own niches.  I wouldn't be surprised at all if wallet services can be developed with the two factor signing that prevents the newer wallet services from losing your deposit from root hacks as well as a business2buisness network similar to Ripple that permits Alice to buy a widget from Bob using their separate wallet services and a mutually trusted middle service, and still preserve anonimity of both Alice and Bob but also Wallet Service A from Wallet Service B using Wallet Intermediary C; and everyone settling  up accounts once each week on the main blockchain only if there is an unresolved balance from all the various B2BRipple transactions during the week.  (It's an idea, feel free to steal it)