You've acknowledged that they are 2 different games. In the heart of it that really is the major factor here. As for what FFXIV needs, it's 2.0. Until then everything really is only filler content. The reason they've been working on 2.0 is because they know they won't be able to make a quality MMO out of their current engine.

TERA looks awesome. I hear a lot of good things about it and I applied for the beta myself to no luck. I've watched plenty of vids out of genuine curiosity though. One thing to note though, that the lack of players in game these days and in the pst couple weeks can at least partially be attributed to the release of XIII-2. Though many players avoided it outright due to the stigma associated with XIII, or because they themselves did not enjoy the prequel, XIII-2 is quite the solid game as far as an FF iteration goes and has been popular with the people who played it. I know I've been absent because of it as well as a number of players from my circle of friends in game.

Ultimately though, I feel like the difference in gameplay will be a major deciding factor for lots of people. I'm also sure a lot of current FFXIV players will know to at least wait and see how 2.0 is before they make a decision on which MMO to stick by.

One thing I say though, is I can only hope that TERA is very successful - as the competition can lead to a great future for both games.