Yeah exactly. However, the bitcoin share of 1/21000000th is dilluted when other coins 'plug in' via an exchange. The bitcoin is now 1/(21000000+others)
I don't think that another coin can "plug in" that easy if it hasn't built an ecosystem, too. ETH and BCH are good examples, with slightly different characteristics. They are able to attract significant money - in the case of ETH because of the smart contract/ICO ecosystem, and in the case of BCH, because they attracted the "big blocker" part of the Bitcoin community (and that's a pretty big fraction, about 25%-30%, I estimate) and the enterprises that are affiliated to it (Coinbase, Bitpay ...).
Other coins can "plug in" for short-term speculation, that's true. But they would never take significant investments away from Bitcoin and the "ecosystem-cryptos".
And I also don't think that it would take away investment from the "crypto economy" as a whole. The only exception: if a cryptocurrency overheats, like Bitcoin did in the past months. Then there will be lots of disappointed investors that will get out. But that happens with every asset that overheats, and has nothing to do with "dilution" by altcoins.
Cryptos will still go on as a transaction option but not as strong as an investment option.
More usage as a transaction tool would be good for value ... because if it's used for transactions, then it has a connection to the "real economy" and would be more stable. What would be harmed is only the get-rich-quick fraction.