This is not a winner take all situation, there will not be one winner for all of LMS applications at least not any time soon. We need to be thinking about market share not "Winning".
We have advantages in a number of markets.
Not everyone likes how Moodle looks. We have a more professional and mature look, and its easier to change our look.
We have advantages in large organizations and in corporate learning settings with complicated and customized permissions issues. .LRN is much easier to customize and we already have the excellent permission model they are now needing to put in.
We have advantages if you want to combine your LMS with your outward facing site. This is due to both our permissions models and our CMS and community features.
We have advantages in combined KM, Intranet/Extranet and learning sites.
We have dotFOLIO and Curriculum Central and bug tracker and project manager that can work with .LRN.
We need to communicate these advantages and increase market awareness in the markets that care about these advantages.
I personally think we should not even try to compete with Moodle in their core market of a single teacher downloading and running a few classes. They win there. Let's concentrate on places we can win.
On Moodle's "One Guy is God" governance model: Yes, that’s a good model, but it's not ours. If we play it right we could turn our governance into an advantage in some markets.
There will be big players who will be far more comfortable with a nonprofit consortium governed by clear rules with a clearly defined path for new organizations to become involved and crystal clear decision making structures.
As most of you know clear governance in .LRN is something I've been pushing for it for a while. We need clear, transparent, inclusive and documented governance for .LRN. If we had it it could be a clear advantage for .LRN in important markets.