Now, without knowing a whole lot about it, I have read that the average cost of mining 1 BTC is somewhere around $300. If Bitcoin spends any length of time beneath this price level then the miners must surely start to switch of their rigs in droves, and with that down goes a great chunk of the Bitcoin network. Unless I am missing something, the whole system could come to a painstaking grinding halt and such a situation would spell out the need for a serious reappraisal of the way in which the Bitcoin system is structured and would have even the most hard bitten of Bitcoin investors cashing out in droves.
This is completely wrong. The cost includes mainly the hardware cost. Once you have the hardware, turning it off is the most idiotic thing a miner could do. So scratch that conclusion from your mind
Miners might stop selling if the price goes too low because they need to get back invested dollars, that is the only thing that would happen with (theoretic) low prices. Current price of bitcoin to make asic mining not profitable electricity-wise is about 30$.You other ideas about bankers taking control over bitcoin etc were also fun to discuss in 2010. Now, there is no such danger (try to buy one million coins at these prices, good luck), we moved to a higher level, government regulation level. Once bitcoin takes another baby step, that won't be a problem as well, because it will move to a completely distributed acquiring network by 2015.