This is already happening. Litecoin is now trading at about $4 per LTC. It is slightly different in that average block generation occurs every 2.5 minutes instead of 10 and the limit is 84M coins, but otherwise it's basically the same idea as Bitcoin.

There are numerous others -- TRC, PPC, NMC, DVC, etc -- that all are slightly different from bitcoin and are actively trading, although their exchange rates are much lower and extremely volatile. Namecoin is actually pretty interesting (embedding a domain service in the protocol), but the others are mostly copycats.

http://dustcoin.com/mining has the most extensive list I know.

Or more likely.. the Bitcoin developers release a new version that allows for more than 21m coins. I think a lot of people don't realize that Bitcoin is still an actively developed beta-version software project. There are several parts of the code that the devs are already thinking about changing (such as the way that transaction fees are calculated, or increasing the number of times you can subdivide one coin). If the 21m limit becomes crippling, I'm sure they will change that too. Really, they can change anything they want as long as they can convince 51% of pool owners to upgrade.

Can you imagine miners or MtGox voting to devalue their own holdings? I don't think many people are in it for the revolution.

> Can you imagine miners or MtGox voting to devalue their own holdings?

I can imagine, if Bitcoin was perceived as a serious currency, nation-states and existing large and wealthy financial institutions investing large amounts in becoming participants in the network.

Can I imagine those institutions acting with regard to Bitcoin the same as they act with regard to traditional sovereign currencies? Easily.

not quite. The 21m upper limit is one variable that can't change.

Would love to hear more details on this; why can't the 21m limit be changed?