I work in the field. Basically, yes. On average it is easier to fly than it is to drive, mostly because there's far fewer things to crash into. But on the other hand, almost any failure can become catastrophic - falling out of the sky will usually have much worse consequences than, say, bumping into the car in front of you.

That might stop being true if the air is as crowded as the roads.

As long as they're all outfitted with transponders, and piloting is automated, I don't see that being an issue.

The air won't have pedestrians and bikes!

Para/hang-gliders, small drones, birds. There's plenty of stuff you don't want to hit :-)

Cue legislation to make kites, balloons and RC aircraft illegal

No they don't. Drones are generally only allowed to fly at very low altitude in most US airspace because they can't reliably see and avoid manned aircraft operating under VFR.

True. But there is a reason pilots are still a requirement.