I think you're thinking about this the wrong way (or interpreting the 1.2 trillion in a wrong way). It doesn't matter if the IPO price is 1 BTC or 0.0001 BTC or one satoshi. The IPO price per unit does not matter at all and the "projected supply of 1.2 trillion" you are using to estimate wether or not that price is too high or too low implicitly contains that initial price: If the price was 1 BTC / ether initially the "1.2 trillion 'cap'" would be 120 Million instead.

It doesn't make sense at all to argue about the initial price. The only variable that could be "too high" or "too low" is the amount of BTC investors invest initially. Since this variable is determined by the collective opinion of the the same people that will henceforth trade ETH, it will be chosen "exactly right".

This is the main difference (in my mind) compared to the NXT issuance model. With NXT the amount of coins was fixed and the price got implicitly decided by the amount of BTC people put in. With ETH the price is fixed, but the amount that will be issued is not. (also NXT ipo was too short and invisible and maybe was even closed early, that's why price shot up afterwards. Had they waited long enough with high exposure to and broad discussion by the public, price would've been "exactly right" after ipo)

I'm not sure which assumptions are used to arrive at 1.2 trillion. Let's make another calculation:

Investors put in 25,000 BTC, so x = 25,000 / 0.0001 = 250 Million ether. Henceforth 0.5x = 125 Million ether will be mined each year, so after ~50 years, we're looking at 6.25 Billion ether. We're looking at 12.5 Billion ether in the long run (~100+ years) assuming 1% annual loss due to carelessness, death, etc...

What does matter is the amount of BTC investors put in initially. This sets an initial "market cap of ether expressed in BTC" with an arbitrarily chosen initial price of 0.0001 BTC/ether. This market cap reflects what "the market" thinks about ethereum value at that point in time.

After that I'm guessing mining and trading will start. Assuming that it's possible to invest exactly up to the point when mining/trading starts, the price of 0.0001 BTC/ether should be exactly what the market thinks the price should be at that time. After that point (assuming a well-functioning exchange) it should adjust according to peoples changes in valuation of ethereum.

There shouldn't be any "shooting up" or "crashing down" of BTC/ETH.

tell me if I'm wrong.