Seems unlikely the 1mb limit will ever be removed.
That would be unfortunate. Bitcoin will never be anything more than a toy currency with that limit in place.
Not a toy currency, but quite the contrary. You don't trade SDR with your bartender currently, for instance, that doesn't make SDRs a "toy" currency.
Bitcoin is the currency of record, and as such it is to be used directly only by the very rich moving significant bits around. The consumer's needs are probably best handled by the currently existing infrastructure, Visa, paypal etc, except this time backed by the real deal (aka, Bitcoin) rather than by the worthless faith and missing credit of some rogue state or other.
Just like anyone wanting to open a Bitcoin exchange can buy a few S.DICE shares on MPEx and then offer a passthrough, just so any bank of the future will be buying a little Bitcoin and then offering the public various toy currencies, dollars, euros, whatever.
Interestingly enough, I've heard other people make the exact opposite argument - that we should use currencies like USD, EUR, gold, silver, etc for long-term savings because their value is far less volatile, and BTC as a way of facilitating efficient transactions between them all.
We could see other cryptocurrencies arise though. I'm a fan of Chaumian blind-coin myself, as it has far stronger anonymity properties, but it needs a centralized provider to operate, so we would need to have a few separate competing such currencies floating around to get a measure of decentralization through the free market. Once everything is done in crypto-currency it becomes easy to stick transactions between multiple crypto-currencies together, do trust-free atomic exchange and stuff like that, and use the best currency for each purpose.