Wonderful. I remember the days of the horribly stale and ineffective Pentium 4; I'm sure Intel would love the excuse to slash its R&D budget and this is just the cue it needs. That sort of nostalgia I can do without.
Yeah, that was a pretty silly marketing tactic. They knew that consumers used clockspeed to decide which processor was the most powerful, so they came up with an architecture (Netburst) that would allow for high clockspeeds at all costs. One of the many problems with that design was that they had to use a stupid-long pipeline to get those clockspeeds, so when a branch-predict failed a lot of work had to be dumped. Kinda like trying to make your water buckets lighter by cutting holes in them.

If they could convince developers to make use of all 8 cores they might have a chance, to a point where less cores is a performance hit, but I don't see that ever happening.
Well, it's not as simple as convincing developers. Multi-threading many single-user applications to the point that you'd see a gain with 8 lower-power cores over 4 more powerful ones is not easy. Depending on the type of application it can be REALLY challenging to design software to run across that many processors without threads needing to wait for other threads (to sync on shared data and such). By the time all of the pulsing, waiting, and syncing is done between threads you oftentimes get little advantage from having 2 or 3 cores, much less 8. It's not a matter of wanting to do it...it's a matter of it being pretty difficult. The story with servers (especially request-response/transaction-based services like web and database servers) is different because many separate sessions and processes are running simultaneously and can easily be balanced among processing cores, but single-user apps like games are another animal altogether.
I don't know about anyone else, but spending $1,000 for a CPU just because it has Intel's name on it is stupid. Yet that's what we'll be expecting should AMD really be trying to exit the desktop market. When you can get an AMD chip for $300 that has exactly the same clock specs as an Intel chip selling for $1200 the choice is pretty easy.
1. The price differences are nowhere close to that. Most of Intel's CPUs that are popular with gamers are in the $250 - $350 range and aren't much more expensive than their AMD counterparts.
2. You can't tell how fast a processor is by its clockspeed unless you're comparing the same series of processors. You have to look at benchmarks. Otherwise a Pentium D 3.4 GHz would be faster than a Core 2 Duo 2.8 GHz, and it's not by a long shot.