1. Will other Alt coins <like Bitcoin Cash> also add SegWit and the Lightning Network, levelling the playing field once again?
Any AltCoin can try adopting the same technology to compete with Bitcoin, but if Bitcoin and any other currency offers the same features, Bitcoin will always have the advantage.
2. Will PayPal and Banks develop their own Blockchain technology with Lightning Network or just buy their way out of trouble, like they did with Ripple?
I believe it's unpredictable at this point, too early to say with sure. It's a strategical game and there isn't a solid plan yet. Crypto-Currency is something very new for them yet, precipitate actions can make decentralization stronger, what isn't their goal.
3. Will Governments come down even harder on Bitcoin, if Bitcoin becomes more mainstream?
I think so. The adoption just needs to increase a bit more and the persecution will start strong... Regulations will come sooner or later for those countries which don't have it yet. The success of Bitcoin represents the defeat of paternalistic governments and ironically a menace for Bitcoin's enthusiasts.
4. Will the traditionalists abandon Bitcoin and support other Crypto currencies where Block size upgrades are still used? <Following the supposed Satoshi vision?> Will those Alt coins still be able to compete and eventually survive?
Only if Satoshi comes in public and tell people to invest in X AltCoin. I doubt it would happen. AltCoins will keep existing and having their spot on second plan in Crypto-Currency world.