The centralisation of mining in China is a huge problem for bitcoin.

Even outside of China mining is limited to areas where electricity costs are low.

This means you could probably map out the most likely sites for mining on a world map without much effort beyond electricity tariffs.

Take out the power supplies to those areas as you suggest - e.g. the hydroelectic generators etc. and you could take out the majority of the miners.

At that point the difficulty will remain quite high for some time and any remaining miners would have problems solving any blocks.

The blockchain would essentially end up in limbo until more hashing power could be brought online or the damage repaired.

If at that stage Bitcoin is a major world currency it could result in a huge financial crisis.

As for bitcoin changing from POW - I don't think it will ever happen. Look how much trouble there has been over block sizes.

I think one of the major factors now holding bitcoin back is the divisions within the community and unless that changes it may prevent it from reaching it's true potential. It is just easier for interested parties to start with something new.

If bitcoin becomes a major world currency at some point this kind of strategic attack by terrorists or a world power could cause immense economic instability.