Your points are, as always, logical and well put. However, I predict Intel will find 65nm to be even more tempermental than 90nm was, and 90nm was horrific for Intel (a 120W CPU? Do I *need* a space heater in my computer case?) Where 65nm might work better will be on the Pentium-M, which doesn't need the clock rates the P4 needs in order to deliver good performance.
Intel does indeed have the advantage in manufacturing, but it also has much higher overhead than AMD. Intel spends more on R&D than AMD's entire operating budget, yet AMD is the one producing all the CPU design innovation these days. You'd think it'd be the other way around, but I think AMD's financially-driven desperation makes them better innovators. Intel can slack off and still make record profits. If AMD slacks off, they're gone.
I'm going to call this a draw, though. Your argment about Intel's lower costs is a very good one and cannot be refuted. However, AMD is a leaner, hungrier competitor and isn't afraid to go after the cheap market if it has to. AMD is used to dealing with poor financials and thin margins, Intel is not and neither are their shareholders.
Intel has it in their power to spend AMD into oblivion with price cuts, but it hasn't done so. Why? Two possibilites: either Intel feels it doesn't have to, or its shareholders have prevented it from doing so. The former argument is becoming less convincing all the time, what with Opteron taking the performance and technology crowns these days, so the latter *will* eventually come into play if it hasn't already. When it does, there's gonna be fireworks, and not the pretty kind