I see what you mean about when cash disapears monero may be all thats left for the black market, and if that can never be exchanged for digital fiat on an exchange (which it likely won't) then white market goods (say food ) may start to appear on black markets, else those selling balck market goods won't really be able to live of their profits. But still purchase of other things like utilities, cars and houses aren't really possible that way . Black market sellers will still struggle to spend their monero profits on things they actually need. Fiat isn't going to disappear, but when paper cash disappears, maybe what happens is that black markets just shrink or disapear as crypto becomes pretty useless for buying things you need to live off. Some may see this as a good thing. Of course any country who doesn't get rid of cash or legalises monero as currency could cash in on this, as El Salvador is doing with bitcoin. Then again they risk get invaded or overthrown in a coup de tat via the US foreign policy. As we have seen in many countries that have attempted to change their currency or petro dollar to something else. eg Libya..
Discussion
I think the lessons from history is whenever governments grow more restrictive, what was once allowable white market activity, now rushes out of it into black markets because prices rise (and thus profits rise - think of large black markets that arose in USSR). Like a hand gently cupping water versus a fist squeezing it. So ironically, if black markets and Monero usage remain small, that is probably a good thing because it means white markets havent grown too restrictive and oppressive.
Yes, for those reasons you say I doubt any country will adopt Monero in any real sense. It is against government interest of power and control. Smaller governments are easy centralized targets. There was a head to cut off. There is no one to go threaten or invade to shutdown Monero. The same reasons they tried and failed to dispose of torrents.