As to your last question, IMO it comes down to simple supply and demand. Miner reward (supply) is limited and trending down over time, while demand is going up, and expenses (energy+hardware+labor) relatively fixed. Miners get paid in bitcoins--not satoshis--so that is the unit that is valued because it has actual cost to it.
I think a more interesting value argument regarding the dilution of Bitcoin value is from the entire altcoin financial ecosystem, rather than using its tiny denominations as value transfers (i.e. colored coins I suppose). There seems to be infinite competition and dilution potential there. Typically, a handful of winners emerge and the rest fade into obscurity.
Bitcoin has the most experienced devs and brand recognition and of course the most secure blockchain, so it isn't losing dominance anytime soon, regardless of the market cap 'dominance ratings'. Its real ace in the hole is the fact that Satoshi isn't going to be arrested for trumped up financial charges. I can't think of another project with this advantage.
Good points, thanks for the explanation. In regards to your last point, do you think all other cryptocurrencies with a similar purpose as BTC were designed by people who might be vulnerable to criminal/financial charges?