I am a CRM consultant; I work mostly with Dynamics CRM, but I know Salesforce.com pretty well also. Some of what you said is true, some isn't.
In Salesforce's favor, they are indeed more flexible, and they have a lot of features out of the box that Dynamics just doesn't have, or require customization to accomplish. Stuff that should be a no-brainer for a CRM system (such as dashboards) are strangely absent from Microsoft's solution (aside from some a measly recent addition to their hosted version), and 3rd party solutions or custom development is the only way you're going to get a dashboard in Dynamics. The out of the box workflow capabilities in Dynamics, though, are far superior to what Salesforce has. It also gives companies the option of going on-premise or cloud, which is important to some companies to have their data in-house. The integration between CRM and Outlook is also in Microsoft's favor, as they damn well should be, since they are both their own products.
All that said, though, Dynamics rarely competes in a "feature" war... the primary selling point for Dynamics is that a lot of their customers are already Microsoft shops, so if they don't already get the product for FREE with some kind of Enterprise licensing agreement, a lot of them still view it as a plus to stick with one vendor. Another big point is that integration with Microsoft's ERP system, GP, is relatively straightforward... a lot of my clients are companies that already had GP, and wanted a CRM for their sales team.
I've helped unhappy Salesforce customers migrate to Dynamics, and I've helped unhappy Dynamics customers migrate to Salesforce. The perception and attitude of the user's is far more a contributing factor to a CRM implementation's success than the actual product itself. It is uncool that Microsoft is having to resort to this kind of bullshittery to try to throw off SF's game, but I'm going to go ahead and tell you that you're dead wrong that Microsoft is going to try to purchase Salesforce. You may not be aware of this, but Microsoft only started developing CRM once Siebel turned down their offer to buy them out. I can guarantee you than any such offer to Salesforce would similarly get turned down.