I doubt having HD DVD would have helped anything but HD DVD. It would certainly have put the 360 at a launch price where it would have sold much worse than it did (imagine it would have been at PS3 levels of price and features with weaker brand name : not a good move).
FF might have got it traction in Japan but I actually doubt it. Japanese can be very put off by such obvious 'land grab' manouvers and might have simply ignored FF on 360. We'll never know but I don't think you can just assume Japan would have jumped to 360 en-masse just because of FF.
To be honest with the exception of price point I think MS has played things pretty well all things considered.
MS real problem is that Sony retains a strong brand, particularly outside English speaking regions, and that it does have better 1st party support which will keep driving HW sales.
As for MS vs Nintendo... well, no one saw that one coming and for the moment its Nintendo that is MS's problem whether they want to admit it or not.
Try to be reasonable... its easier than you think...
