Yes, Virgin doing the route is more about having a complete network and getting government business than making massive profits. They are now at a critical mass that they can afford to do such things methinks. And of course CBR-SYD opens up numerous connecting flight possibilities.
Re: Rex, I think it will make it tough, but the quality of their service will ensure they keep the majority of their customers. Currently they offer by far the best service on SYD-CBR. Hopefully they will someday come to some arrangement with Virgin. By now they must realise that hanging out for Singapore Airlines is more and more simply a pipe dream.