Third, yes, Bing has added some cool innovations, but nothing that Google can't and won't copy immediately.A specious argument, at best, because it doesn't take history into account. When Google was first launched, people were very happy with the search options they had - Altavista and Yahoo. No one even thought they would switch to Google; case in point - Yahoo! is still the top dog in the AMEA markets. Google established a search monopoly only a few years ago, and though it has made incremental strides in its offerings since launch, it hasn't done anything along the lines of a revamp that Microsoft has undertaken with Bing.
And that gets to the heart of Microsoft's problem here: Search isn't broken. The reason almost 70% of folks use Google is that most folks like Google and most folks are used to Google. If there's a 'better' search engine out there, most people probably don't know that it's better (because it's really hard to tell--in part because 'better' is in the eye of the beholder), and many people who can tell probably don't care.
Any prognostications on the future of the Search engine market are doomed to failure, because no one can really predict the psyche of users. If Bing continues to innovate past the "honeymoon" stage of its launch, I would be hard pressed to believe that it won't eventually take market share away from Google. Apropos the discussion of Google copying Bing, two things come to mind. First up, a few months ago, no one would even entertain the idea that Google needed to copy anything from Microsoft - the Bing team should pat themselves on the back for a moment. Seconly, the problem with copycat implementations is that people are observant enough to recognize one on sight; human behavioral studies have shown that "discerning" people usually pick the original over the ersatz version.