Hmm...Let me go over your points:

It’s classic zero-sum thinking. Crypto isn’t competing against crypto, it’s competing against fiat.

In a perfect world that might be true but unfortunately it not.
EOS, Cardano,Neo, Ethereum and many other competete agianst each other to be the dominate smart contract platform. Plus with the additon of sidchain UTXO chains can have scale able smart contract platforms as well.
Bitcoin,Bitcoin cash and many other compete to be digital payment.
If you bleive in free market then you believe in competing againt each other-the best would win. The best doesn't mean in terms of tech but in terms of trust,adoption,price and other factors but tech plays a role as well.

Bitcoin can still be incredibly useful and important – and 100 times its current market cap – and still have less than 50% overall market share, or even 10%.

True.

As the number of altcoins increases, and the number of crypto tokens used by businesses for many and various purposes, the market cap of non-bitcoin crypto will inevitably increase. A million tiny but genuinely useful projects with $1 million valuation is a trillion dollars. None of these threaten bitcoin. Collectively, they don’t indicate bitcoin is less valuable either.

True but those are terrible indicators. A standard should be set where the top 100 cryptos count toward the Marketcap. Those million altcoins are manipulated way to easily.
https://www.businessinsider.com/why-its-inaccurate-to-measure-cryptocurrencies-by-their-market-caps-2018-1
https://blog.coinfund.io/cryptoeconomics-is-hard-market-cap-4833c378a3e0

These ‘alts’ include tokens like Tether, TrueUSD and other fiat-backed cryptos that add to market cap but don’t compete with bitcoin. As the ecosystem grows, so will the proportion of market cap occupied by stablecoins. That actually reflects demand for bitcoin, while reducing dominance.

True as well as profit share tokens are close to Securities.

I do believe some tokens should not be listed on a top 100 list on CMC bc they are not decentralized but who knows could be just me.

Blockchain applications and tokens do a lot of different things. A LOT. They’re not all money, or a store of value – digital gold – like bitcoin. They don’t compete for bitcoin’s #1 use case.

Not true-the golden aim is their coin or a token on their coin to take place on bitcoin. For exp, Eth founders/figure have know claimed that Eth is a store of value. Again to my first part, Crypto all compete with each other-so directly some not.

There nothing wrong with Bitcoin dominance-it just how the free market works. Being better in tech does not mean better. There are way more factors than that.