You're right when you say that the dollar will not disappear entirely, at least not in the near future. It will probably survive as a minor local currency, but it's glorified status as the world's reserve currency will surely come to an end.

As for a centralized digital currency, it might be a good alternative to our standard fiat currency. But I don't think any such currency will be able to compete with a truly decentralized, deflationary currency such as bitcoin.