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With the economy slumping, I wouldn't be surprised to see a resurgance at Ebay.
Or at a startup that's on its way to replace eBay :)
This is in an industry of scale.

For that very fact alone starting a company in this area would be a really bad idea. It's not even on the decline yet let alone in a weak position.

No. eBay was a good idea at the time executed without enough mobility.

Auctions are losing a ton of share, and fixed price has been gaining pretty steadily.

This might be because fixed price distributors have gotten smarter at setting prices, not because fixed price is inherently better than auctions.

It doesn't really say that ebay are doing less auctions than before, just that fixed price are gaining share. I doubt auctions will die off completely.
No, I think eBay shot themselves in the foot by acting arrogant towards both sellers and buyers.