I think smaller markets not being able to compete is a myth. Smaller teams beat bigger teams all the time. The big spenders such as the rangers, flyers , blues and leafs.. what have they done over the last 10 years? Look at New Jersey.. 3 cups and 5 finals in the 10 years of the last CBA. They're by no means a big spender.
There's no such thing as competitive balance. Every sports has good teams and bad teams. Even in the NFL, Teams are 11-1 and 1-11.
I think the players are giving alot back and as you said, the base salaries to work with will be lower (especialy for arbitration). You can't put in automatic fool-proof systems to protect the bonehead owners from themselves. This is like limit poker and no-limit poker
. A salary cap is limit, that's no fun. Let the owner's go 'all-in' on their superstars and then we can all laugh at them when they finish last like the Rangers.