1. Can this .net site reach # 1 on Google?
Yes!
2. If the .com owner decides to develop his domain and does the same thing at a later date, will my site (.net) automatically lose it's ranking just because it's a .net ?
No!
However, you have to keep in mind that the .com will be easier to rank. You will hear some saying that as far as
SEO goes, the extension doesn't really matter, but I have noticed that most search engines tend to prefer .COMs.
If the .com owner decides to develop his name and follows the exact steps you did, while you do nothing, then eventually he will outrank you - but that's highly unlikely if you don't just give up on the site.
That's my 2 cents
