Restricted space => creates fee competition => dust will become non-economically viable to move around.
Restricted space => fee competition
More adoption+fee competition => expensive fees
Expensive fees => stalled adoption
Stalled adoption => declining interest
Declining interest => what are we even trying to do here?
This, however, is not a description of how bitcoin will fail but how bigger blocks are inevitable.
I suggest you go back and reread what Jorge wrote also. He describes well how the block size limit encourages attacks on Bitcoin
Also, it is not on developers to be setting up fee markets. It should be the realm of, well, the market.
Not all Bitcoin users are created equal. Not all individuals have the same financial pain threshold.
Expensive fees might deter direct adoption of Bitcoin by less financially priviledged persons but has absolutely no impact for the faction of individuals controlling the largest portion of monetary wealth worldwide.
Contrary to popular belief Bitcoin's immediate target market is NOT mainstream consumers.
no it impacts the financially privileged as well, they can no longer speculate bitcoin will be currency.
Nonsense. Bitcoin is not limited to its blockchain and the obvious end game for transactional uses are open payment networks like Lightning.
The wealthy are mostly concerned with shielding their capital from dirty regulators hands and oversight. Bitcoin offers unparalleled value in that regard.
Yup, with not reversible transactions, bitcoin is a terrible payment channel (also price volatility makes it even less convenient).
See bitcoin and the poor: http://trilema.com/2012/bitcoin-and-the-poor/
It seems the whales like a solid 10% gain per rise, before the take you out back and beat you like a punching bag for a bit. 
Live and learn.