This will be an uphill battle. Hulu's interface is slick, and they host fresh content. YouTube's interface sucks (in this usability consultants humble opinion) the commentator's are vile (they have the same problem that Xbox Live has: c-bomb and racial-slur dropping tweens) and the content they're hosting is old second tier series. It's obviously way early to call the fight, but that's how I see it right now.
Possibly, but Internet TV now is all on-demand and there aren't any 24/7 streaming CNN or ESPN channels people are use to.
Give it five to six years and Internet TV maybe giving cable TV a run for it's money. If it does then the capped bandwidth plan Time Warner has been pushing might become how we pay for our broadband(possibly).
Time Warner Cable just shut down that plan due to all the customers calling in about it and saying they hated it. I think if it is going to be metered, better chance doing it at like 10 cents a gigabyte.
I might be scared if it was Apple. When people watch their favorite TV show, they don't want the functional but spartan interface that Google provides for all of its services. They want a UI like Hulu's or better. Entertainment is an area where you can't get by on just functionality like Google is used to.
I know many people that like Hulu's interface better, but that isn't why they watch it over YouTube. They watch Hulu because it has shows they want to see. And when they want to upload or share that funny video of their kids, they use YouTube.