I imagine these forces would not swing back and forth between such extremes, but would rather balance each other out somewhere around the middle. Once new bitcoins are no longer being produced, I foresee that fairly constant ratios of coins will remain in circulation and in savings. The inflation/deflation rate should tend to zero, excluding the very important effects of population growth, economic growth, etc.
Do others agree with this assessment?
You are probably right about the extremes balancing each other out somewhere in the middle, especially as the bitcoin ecology grows.
The last assumption however, that inflation/deflation rate should tend to zero is not a given.
The overall inflation/deflation rate depends entirely on how much request for bitcoin there is to do its main business, which is to be used as a payment medium.
Large changes in user base will inflate/deflate the currency.
Double the user base, and you will roughly double the value of each coin = deflation.
Cut the user base in half (because - let's say - users leave for a different bitcoin implementation) and the value of each coin will roughly be half = inflation.