Everything you've written is correct. This is envisaged in all currencies, even in Bitcoin.
There's the mining services market. Some miners are greedy and want to get as big a reward as possible. So they choose transactions which maximizes their incomes. Miners receive only the fee from transactions, which means that they maximize the amount of the fee. If mining stops being profitable, they will start accepting transactions with a large fee.
The decision is within the responsibility of the miners community. Also, if only a half of the miners accept this decision, this will decrease the speed of cheap transactions. I think it's too early to make such decisions.
Interesting point. Then I am curious why they still accept small fee transactions, mining isn't all that profitable.
In fact I think that was the idea behind halving the reward in the first place, so why no pools raise their fees, I dunno...
I didn't notice in simplewallet any option where to set the transaction fee. Does CryptoNote even have this feature? I haven't really looked through the sources.
Also, I think there was a thing when if the blocksize was too large on XMR and QCN the reward was reduced significantly. Now after they raised the fee to 0.005 the problem disappeared, though I'm not sure if there was any connection, maybe just the update itself fixed the problem. That was ridiculous, if processing transactions reduces your reward, why process any at all? Unless, the fees are greater than the block reward perhaps.