How competitive will it be as a DSLR with a movie mode? The Scarlet FF35 seems to be the closest to that right now (apart from the $45,000 medium format solution) It's likely to be about a $14,000 camera once you put a viewfinder and a grip on it, competing with the $7000 1Ds mk III (probably the 1Ds mkIV by the time you can buy the RED) and the D3x, however much that turns out to cost ($6500?). Right now, the 1Ds mk III doesn't shoot video, but the 1Ds mk IV probably will, and I would guess that the D3x will as well (although Thom Hogan doesn't think so, and he tends to know these things).
Right now, judged as a still camera, the RED has better specs than anything you can buy today in two areas. The less important is frame rate - because it's a movie camera shooting stills, it has a continuously variable frame rate up to anything you might want in a still camera. I would be surprised if any other camera in the 24+ MP arena goes over 5 fps in the next year (unless it's a similar surprising hybrid) - the RED allows D3 speed with 1Ds mkIII resolution simultaneously. The second area where the RED is beyond anything on the market is dynamic range - they claim 13 stops (although the RED One claims 11 and is said to have about 8+ really good stops)... Even if they get 11 printable stops (the darkest two may be fine in a moving image, but too noisy for a fine-art print), that will be at least as good as next year's best DSLRs, maybe slightly better (I have high hopes that the D3x may be close to an 11-stop camera - the D3 and the Alpha 900 are both pushing 10 from RAW).
Assuming that the RED's DR is superb, but not a quantum leap over what else is out there - let's call it just about the same as the best pro DSLR -, and assuming that the competition has a pretty nice 1080p movie mode (EX1 level, likely without all the audio capabilities of an EX1, with FF35 depth of field) in a pro still camera by that time (neither DR nor movie mode guaranteed, but both seem like reasonable guesses), the real difference will be 1080p movie mode versus RED's full resolution movie mode.
RED is saying "pay twice as much for your camera (compared to a Canon or Nikon pro DSLR), and get a full-fledged movie camera (resolution as good as anything in Hollywood) built in". Would you be willing to pay this if the Canon and Nikon DSLRs had decent 1080p video? What if they didn't?