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In answer to:

Q1) Nope. Nintendo would still be dominating. If low price point was the issue, the PS2 would be the one selling 300,000 a week (or whatever the figures are these days).

Nintendo is dominating because they've managed to capture a market by offering something that the only the PS2 had managed to do previously, the casual market. But they've done it so much better by incorporating an easy to pick up and play structure out of the box and then forcing you to buy un-necessary peripherals afterwards, where as sony got you to do the second one only last gen.

Q2) Nope. 360 would clearly be in 3rd place, just as the PS3 is at the moment. Difference is, PS3 will catch up by brand recognition alone, Xbox doesn't have that (yet).