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Palworld isn’t slowing down, hits 19 million players across Steam and Xbox
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Maybe. Maybe not. Pokémon isn't successful because it's good. It's successful because people want to play Pokémon. If they can have the same experience of capturing and training Pokémon in a different format and name, it may compete with them. Admittedly, PalWorld is missing a lot of the higher level Pokémon things, but I don't think that matters to the vast majority of players, and hunting for perfect traits may make up for it.
I don't think it's a particularly great game, but I also don't think Pokémon is.