It doesn't seem to me that X1950 Pro will pose much of a threat to the 8600 GT/GTS. Performance is sometimes lower, often similar, and sometimes higher, but featureset is lacking in comparison.
That all depends on the review that you're reading. If I'm to believe [H] the GF8600GTS is a god sent gift for the mainstream. Most other reviews on the other hand.
The X1950 XT is significantly faster, but selling it for under $200 street price (where the 8600 cards will likely hit) seems unlikely, since margins would be a disaster.
In Holland you can already buy a Sapphire X1950XT for €186,24. That's already less expensive than the OC versions of the GF8600GTS which go for around €200 (cheapest GTS currently €180) and are still significantly slower.
AMD has always been competitive when it comes to pricing. That's how they operated in the last couple of years in the CPU market. It wouldn't surprise me if they'd do the same in the GPU market.