Then it's also the end of crypto as a consumer product. Centralized exchanges offered a ton of usability and monetary incentives that brought people into crypto.

Trying to rebuild a user base without those things will essentially be impossible. Even during the days of free money in 2021, the full crypto user base wasn't huge. With high interest rates, tons of fraud in the rearview mirror, and enormous obstacles to usage, the community will be a tiny fraction of even its previous tiny fraction of traditional banking customers.

Is there any real alternative for money (dollars) to make it into and out of the system, at large scale?

Stablecoins

And where do you cash them out? At Tether’s Bahamas office?

(+) Note: must be a non-US person, minimum transaction $101,000

Stablecoins are great. Personally I recommend USD.

How exactly will you turn 1USD into 1USDT or 1USDC or vice-versa without opening an account with a centralized exchange?

$10-100K: You can P2P your way through your local discord channel, paxful or gift cards.

$100K-$1m: At this point, you are looking at a heavily regulated exchange or an OTC trader. Those exists (ie: Gemini).

$1m+: Deal OTC directly with an "exchanger" that has a banking license. (There is one in WY)

At <$100K, what is the %loss due to fraud?

Exchanges are not a problem.

If FTX kept to their ToS they would have all the funds available and there would be no collapse. But they were greedy, decided to use user funds without authorization, then lost them and the whole thing came coming down.

Exchange which is transparent and truly does not trade with customer assets has no risk involved (other than hacking and similar) and should/would be a massive money printing machine.