I REALLY hope so. I'd LOVE to see HD DVD win the war.
I believe that in the long run it will, but not only because of price, but for political reasons.
I believe the "players" in the game (studios, CE manufacturers, software developers, authoring studios, replicators, ... ) are uncomfortable with Sony's power.
Sony is a (big!) content provider, so it is a competitor to the other studios.
Sony is a (big!) CE provider, so it is a competitor to the other manufacturers (who certainly don't like the pricing of the PS3).
Sony is a (big!) replicator for BD, AFAIK the only one who can replicate BD50
Sony is a (strong!) member of BDA, I don't believe BDA can make any move without Sony's approval.
Sony is a (big!) provider of copy protection technology.
EDIT:
Sony is a (big!) provider for professional BD authoring tools / software.
The list may go on, Sony is very powerful in many places (AACS, BD+, even DVD Forum where HD DVD is developed).
It is a "bad thing(tm)" to have "State and Church" combined, we know this. And it is a "bad thing(tm)" to have technology provider, replicator, content provider, hardware provider and copy protection provider in one person.
I believe this is one of the reasons Paramount backed out, they simply don't want to be so dependent on one of their biggest competitors.
What happens if Sony says "sorry folks, we don't have enough production capacity to replicate Transformers for the holiday season. Sony Pictures needs all our capacity for Spiderman 3".
I don't believe Paramount took this decision lightly. They probably realized "oh my god, if BD really wins the war, and it might look like this, we're royally screwed. We must turn the rudder around now, before it is too late".
I also believe some CE manufacturers will slowly move to HD DVD, some are already working on dual format devices.