You are right. A different way of thinking of this is that we'll be able to saturate whatever cable capacity there is with excess solar and wind in order to charge whatever battery capacity needs charging. It's a careful balance between time shifting solar and wind with batteries or shifting it in space with cables. They complement each other. The natural consequence of people installing more solar, wind, and batteries than they need is running surpluses most of the time. Which means that whenever there's a local shortage, cables are a way out because there's plenty of energy in the system. The more excess energy there is, the more attractive cables get.
It's not an either or thing. And this will be a self optimizing system as well. It won't be up to grid operators anymore. If people need more power, they'll get some even if the grids won't provide it. And if they need it to be more reliable, they'll fix it anyway they can. Which includes using batteries, generators, and whatever else works.
Hydrogen for energy production is a bit of a fantasy IMHO. Awful battery. Expensive to create. And there are plenty more profitable uses for it than sacrificing it as a simple methane alternative. Honestly, burning it is a bit desperate. If you have all this valuable hydrogen and burning it is the most valuable thing you can imagine doing, you're doing it wrong and missing out on some big dollar amount of more sane shit you should be doing.
Cables are expensive mainly because of policy. They are mainly made using commodity materials (copper, aluminium, etc.). Cable manufacturing isn't expensive. Installing them isn't rocket science. Land disputes on the other hand are cripplingly expensive. Solve that and cables become cheap. Geothermal works the same way; not that hard. Drill some holes (oil companies are really good at this) and that's most of the work. Getting permission to do that is the hard and expensive part.