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Monster Hunter Portable 2nd G can't really be compared to dragon quest 7 as it was heavily heavily bundled.

Monster Portable 3rd sales really are phenomenal though. I would say monster hunter is currently more popular than dragon quest in Japan. Will see how dragon quest 10 sells though to know for sure.

probably that's the answer... mh is great for the replayability, the game is almost infinite, yes you can beat all the monsters but that doesnt end there, once you have a nice set you want to try other and then other and so on, same for the weapons... DQ is great, I invested 60 hours on the game and I dont regret, but I dont feel like going back... coop is impossible for me here (costa rica) but still seems like a nice addition to the series...

To make an honest view of what I think:

Dragon Quest is more popular with general public.  People of all age groups and walks of life like Dragon Quest.  As well, the sales for the games continue to rise, even in this generation, when many long standing series (especially RPGs) are being passed up for by new IPs.

Monster Hunter seems to be more popular with the 14-26 year old crowd.  Those 'in the know' and who play a LOT of games.  And if western sales of the series are anything to go by, it seems like even more of Japanese fad than Dragon Quest.  Which is ironic as both are very western influenced series.

In the end, I think Dragon Quest is the more solid and popular series.  But Monster Hunter can't be overlooked for its amazing surge in popularity.

In the end, Pokemon kind of does what both series does combined, which is why you'll never see either series upstage Pokemon.

in terms of the sales of the mainline games appeal, it probably will.

In terms the actual popularity of the series and spin offs/remakes, DQ will still rule.

it probably has, but DQ has been around for much longer and is quite likely to be around much longer, MH is relatively new (well high selling ones anyway), so it is difficult to see if it has hit its peak sales yet, or even if its still growing, but I think for the time being, its a tie, once DQX and MH4 release, we'll know which is the greater sales beast

I can't find a source but Capcom said they won't release it in west .... on PSP. So probably it will be one of start games for NGP.

Short answer: yes.

Long answer: look at the installbase difference. Its almost 2:1, yet MHP3 will sell in japan at least 500k more then DQ9 LT. I know that installbase isnt always a factor, but the difference is staggering. IMO MH became the biggest 3rd party IP in Japan, and if it maintaines its mommentum, then it will probably become the leader for some time.

Also, Im hoping that one day it will have a breakout release in the West like FF had with 7

I think that is tough to say. MHP3 is obviouslly going to sell a lot more than DQIX because it is still selling well. I don't think it has had a budget rerelease yet either which always  seems to help the MH series. So I think 5 million is still likely for that game in Japan. That said, I thik DQ has proven itself to be a huge franchise consistenly for many years, and on both portables and home consoles.I think if/when DQ X releases on Wii and sells ~3 million compared to MH Tri's ~1million, that will be a strong argument that overall Dragon Quest is still the stronger franchise. I think MH will become the bigger franchise, I just think it needs another big release or two to really prove it.

Maybe MH4 using dual analogs of NGP and touchscreen for equipment etc would have a chance?

For west i think biggest problem with such games were always controls being diffrent from normal gamepad and lack of connectivity options for multiplayer on the way -  both should be solved by NGP.