If this gains sufficient traction, and if this provides a better-looking way to render stuff on screen, I guess this will lead to applications that talk the superior protocol, not The X protocol. Such applications would not run on X displays.

If I interpret things correctly, the link you give explicitly describes such a scenario:

Further down the road we run a user session natively under Wayland with clients written for Wayland.  There will still (always) be X applications to run, but we now run these under a root-less X server that is itself a client of the Wayland server.  This will inject the X windows into the Wayland session as native looking clients.  The session Wayland server can run as a nested Wayland server under the system Wayland server described above, maybe even side by side with X sessions.

So, the X protocol could still be there for quite some time to support 'old' applications, but new applications wouldn't use it anymore.

There are quite a few if's here, though. The first non-Ubuntu application to drop X support could face quite an uphill battle.