I think it's missing the point. Yes spending $3b might get you control of one currency - so everyone moves their money to another one. There are thousands of them. That's kind of the point, no-one can ever dominate all crypto even if in theory it's possible to dominate one.
Yes it is possible although it does not make any sense as people can migrate to Ether. A 51% attack means that a group of people in this case governments can control more than 50% of the network and are able to make transactions not valid if they decide to. Of course transactions that are made after they have taken control of the network. Also when this group is in control it can double spend the coins from transactions that were made when they are in control. This remains only hypothetical so far and I doubt we will ever see this attack in action.
It would make no sense from an economic point of view, you're completely right. But it would have a huge psychological effect, that would affect all cryptocurrencies.