A third possibility
re: "...but in order to make it worthwhile for free enterprise to get involved we're either going to need some radical technical breakthroughs or we are going to have to find some product of enormous value there which will make it economically feasible."
Or: we find an off-planet market for resources. My hope is that we get enough people off the planet that there is profit to be made by providing their needs.
I agree with you that it will be expensive to get to that point, and that govt. will be the biggest driver.