> Would the increased sales from using DVD have made up for the increased manufacturing cost?

It would have been crucial, but not enough. Sony's hype was strong. Remember the supercomputer status? The only reason the XBox stood a chance was because it had strong specs. People were even more into specs then than they are now. So in answer to the "waiting a year" question: it hurt it a lot. They really needed that year to build momentum and they didn't get it.

> Would launching with dual-stick controllers have saved it and jumpstarted the era of the console FPS early?

No, but I do think the controller needed help. The analog sticks were slippery, the triggers were positioned awkwardly, and the VMU was overengineered. Maybe the VMU costs were negligible but they seemed like a waste.