Unless miners start colluding their strategy will become "include every possible transaction with fee greater than $0." which means fees will settle at the smallest possible value greater than 0.

Yeah sure, everything I buy costs the smallest possible value greater than zero.

shawabawa3 already explained it "There would be an equilibrium where the fee is worth the marginal cost of mining it"

The miner has cost X and wants profit Y. He adds those together and now the price is X+Y. Someone wants his transaction on the blockchain, he is going to pay X+Y unless there is a miner that offers an even lower rate.

You're making the assumption that the block reward is high enough to make transaction fees irrelevant, which is a trivial observation and not what we are interested in talking about here.

There is no cost to adding a transaction to your block if its size is uncapped. Once a miner completes a block why wouldn't they maximize the profit they can make on it?