I agree that a major reason that Pioneer currently has a $1500 MSRP price difference between say, the 4360 and the 60u series Panasonics is the efficiency of the operation. Economies of scale really do explain a lot of why Panasonic can still make a TV that (IMHO) gives probably 85% of the performance of a much more expensive Pioneer TV. They have cut some costs through other methods than massive production - their production shouldn't be that much up this year, yet their sets have dropped $500 MSRP. The reason? The 60 Series has No Cablecard, a mostly feature free menu (limited tuning adjustments, no split screen, no PC input, etc.). There is some discussion (which seems to come down to a matter of opinion) as to whether Panasonic has downgraded their processing from last year's 50u sets.
I guess what I'm saying is that Pioneer's xx60 and Elite sets are now in competition with the (currently vaporware) 600u series, which should still MSRP for $800-$1000 less. If Pioneer markets very well, and can avoid their curreent supply chain problems through getting the former NEC lines going, they can and will appeal to a niche market (say 25% of plasma buyers) who aren't buying plasmas as a commodity, but as a high-performance set. They'll survive in that case, through their value-added features, (IMHO) better picture, better scaling/processing, etc. If they continue to try and meet Panasonic, LG, and Samsung head on by trying to cut features and become price competiive, I believe they'll fail miserably. Pioneer must appeal to the market for whom price is a secondary consideration - people who seek performance first.
Can Pioneer overtake Panasonic? Not for a long time, until they can build a huge production base. A better question would be "do they want to be number one?" I'd say no, Pioneer will probably settle for being the best-regarded high-end set. They'll have to change the way they market, emphasize their Elite line, and perhaps narrow distribution to dealers who can better explain the Pioneer advantage (once again, IMHO, and speaking as a Pioneer marketer would have to). In that case, they can survive and thrive. Otherwise, I believe they'll have serious problems.
Right now, Pioneer's biggest issue is the fact that when folks walk into Best Buy, Pioneers don't compete. This is why: Without an expert salesperson they feel they can trust, people simply won't listen to, or understand, the differences between the Pioneer and the Samsung sitting next to it for $1500 less. They won't buy it. (This is my observation as a former BB/Magnolia salesperson.) And you can't blame them, honestly, when on a poor store feed, none of the plasmas on that wall of 20 really look that much different.
Customers at those types of stores don't notice number of inputs, the convenience of a media box, a better remote, the subtleties of PQ, Picture-in-picture, cablecard, or anything else. They notice three things: the general vividness of plasma PQ (which almost any set can provide on torch mode), the looks of the bezel, and PRICE. And the cheapest set that has decent picture, and won't look horrible in the living room is the one they go home with. And right now, that's not Pioneer.
Right now, for the money, Panasonic seems to be the value leader, and will be more so once their 600's are available. However, there's a reason Wal Mart hasn't run all grocery stores/retail stores out of existance - some people will pay more for better selection and better service. That's the market Pioneer needs to pursue. If they ride the fence, or go for value-leader status, as I've said before, they'll be in big trouble. Just look at their lower end sets at places like Costco...
BTW, I do not agree with the assessment forwarded above about NEC's newest sets - they look fantastic to my eyes, and I'll probably be purchasing one in the next month