Good post and a fair summation I think of the choices the 'other three' face in terms of how to compete with City.
My own opinion is that Abramovich decided long ago he wasn't going to compete. Hence the biggest transfer fee they've paid post Torres is 32 million pounds for Costa/Hazard. This is a very different model from the one he used when he came in and is much closer to the Arsenal one. It's interesting for me because if Chelsea/Arsenal do continue to be content with a top 4 finish each year without there being an enormous pressure to deliver trophies we could end up in a situation where City dominate the league for the foreseeable future.
In a way that'd be a shame. Winning a competitive league is far more satisfying that winning a two team one. I'm not saying it's currently uncompetitive BTW, just that if the trends continue I can see us being miles ahead of the likes of Chelsea and Arsenal in five years time.