If Bitcoin development to the point where 1 Satoshi equals 1 USD that means an increase in demand,
It could also mean USD has lost its value and with the way they are printing it, that's not going to be far

1 Satoshi is already about 1 GNF (Guinean Franc).
Doing that would require a total blockchain data rewrite, something blockchain was designed to prevent.
Not necessarily. It is just data interpretation which means we could keep the blockchain files and transaction structure intact up to the point of the fork and deserialize it as before, but introduce new deserialization rules for any new blocks that come along. Somewhat similar to how we implemented SegWit.