Lol I just mentioned two random teams that happen to spend twice as much on salaries than two other random teams, I didn't intend to discuss their transfer market policy
As for your questions
1) There were signs of Italian football recovery in 2020 but it collapsed due to covid.
2) The PL is thriving on mostly turning a blind eye to illicit financial activity that drives money into the league. Started off with Abramovich who failed to secure the Due Diligence of FIGC when he wanted to buy Fiorentina before they got bust and wouldn't get past it for Parma (who didn't want him involved in the first place). And this is Italy, in the early 2000s. Hardly a regulation paradise. He'd also fail to buy Manchester United which was his primary intention because the LSE would ask for proof of funds. Ironically, after owning Chelsea he was able to get past the DD because he was already approved by an EU member and that was iirc his first plan, but Italians didn't want to sell to a foreigner.
The PL and the EFL do not, they accept the highest bidder even to this day, cue Nottingham Forest's acquisition in 2017 as an example.
So it will burst only if the Americans tell the British that they don't like what's going on. With more Americans involved it's not certain if we're going to complete the money laundering cycle and legitimize the whole thing (we're sort of there now) or if they'll want to cleanse the whole thing as they'd want to stop being involved in such an environment.
There's also no reason to think that there's no room for growth for Italian, French and Spanish leagues. We've already seen lots of interest from investors.
Some billionaires want to sit at a table with the other billionaires, others want to beat them, others may want to create a new source of revenue elsewhere by having a CL winning side.
There's absolutely nothing to suggest that there's less prestige in owning a non-PL team. The only thing that stops it is the fact that it's far much easier to purchase and own an English club because no one asks questions and your money gets things done. In Italy this only happens if you're Agnelli or a friend of his. And they don't like it when other teams get good stuff.
The other issue we have is that apart from Americans who want to have a return on investment (ie profit) and some Arabs who eant to show off their money, there aren't that many interested in investing in sports. The Old Money hates this environment and the New Money that wants to maintain a high status do not want to be involved in a "populist" sport that thrives on dealing with betting companies, shady agents and corrupt organisations.
So whether or not a bubble will burst is unknown, they're already stopped their upward trend from what I saw but it may well be an aftermath of covid, but if you see a resurgence of Spanish and Italian football, it won't matter how much money PL throws because it's not going to be able to compete with the big names. English football doesn't have big name clubs apart from Liverpool and Manchester United as much as Chelsea, Arsenal and Man City are trying and as much as Newcastle will try.
Italy needs to host the Euro (the idiots skipped on 2028 and will go for 2032) and we'll see a rapid recovery around 3-4 years prior to that. Which is closer than it sounds.
Spain similarly wants the 2030 World Cup and they have the two biggest clubs of the century and the greatest club in the world.
It's closer than you think. The PL does not have a viable project as the "dominant" league because its viability depends on other leagues being in a terrible situation, not even just a bad one, since we saw that Spain had the better league in the early and mid 2010s despite the financial issues.