Will mining taper off to little to nothing, will difficulty levels be adjusted to compensate miners, or what else?
Yes. That's equilibrium mechanism: when mining becomes less profitable, the less efficient miners start dropping off, hashrate goes down, so does the
difficulty (it adjusts every 2016 blocks). The remaining miners are getting bit more bitcoins for the same hashpower which compensates for the drop in price.
A very good explanation so far. I am sure, it would all depend on those who would be willing to still be a part of the show in the long run, but as I see it, in that kind of scenarios, the small miners will always be the ones to bail out first and the big ones will still be able to find a way to keep doing their thing. As long as the number of miners reduces due to profitability, the existing ones will get more at the end, it is as simple as that.