Long-term, what I think will end up being a bigger issue is the apps that aren't even written for the iPhone out of fear of rejection.That's a nice fairy tale. Anyone who wants to make money will make an iPhone app, because the other phones do not have marketplaces of the same magnitude. And there are very few people who have been rejected. Most rejections seem to be non-final for the sake of fixing trademark issues, inappropriate ratings, or serious bugs.
The elephant in the Android room is that Google can't decide if they want an open platform, or their own phone. They started with the platform ("PlaysForSure") play, but soon decided to pursue their own vertical ("Zune"). The problems with the platform play are the lack of at least one strong competitor, and the bane of Java: "write once, test everywhere". The explosion of test environments make it difficult for small shops to ship a quality Android app.
Plus the Android market is mostly people who (a) didn't want to leave Verizon, or (b) want a cheaper phone / plan, or (c) have control issues. The end result has been that the Android app market is a toy, and the AppStore is the winner taking all.
Everyone is entitled to their own opinions and predictions. I have no intention of changing your mind. But know that your arguments are classic second place arguments: "people will change because they want this feature", "developers are afraid of failure". People do not change until they feel second rate (the complete iPhone experience is extraordinarily better than a less restricted app store). Developers are motivated by possible success, not possible failure.
In short, the iPhone will lose when people start buying something else. Nothing that anyone says in a forum has any bearing on that at all. Apple is working harder than anyone else to win, and they are far ahead.