"[1]No, I'm saying that the PSP shouldn't be a dominant choice for a game this big."
Final Tuned isn't even that big, atleast in terms of consumer buying (it'll be the biggest arcade). This is mainly due to it being the 3rd home release of the game. If this was the first time VF4 had ever been released on a home system I could see your point, with this being it's 3rd release, I don't really get it.
"[2]At least there's a market to sell it to. What if PSP bombs (and don't ignore the considerable) chances, then your theory goes out the window. If PSP succeeds, VF4FT still wouldn't do that good because of the small userbase and difficult competition gaming as noted above."
What if it's a success? It's not like Sega would be expecting huge sales from it anyway. Evo has sold at most 300k worldwide (probably under that). If they released it on a console they couldn't be expecting anymore than 200k for it. I don't see the PSP having any problem putting up 200k worldwide even if the entire system were to bomb. Releasing it to a completely new market is the smart thing to do with the 3rd different version of a game. You're just going to get less and less sales if you continue trying to sell it to the same market.