As pressure is increased in the keg, and the CO2 PP drops it will effectively be replaced by N2 and O2. These will also go into solution. If the pressure does not drop then no CO2 comes out of solution as the pressure of CO2 (absolute) has not dropped, merely its relative percentage. So as we dispense and the headspace increases the CO2 in solution will become relatively less, but the amount of O2 and N2 in solution will have (relatively) increased. As we dispense more then the bubbles appearing in the beer will change in mix (and probably effect) but they will still be there.
Nope. The pressure of what's "above" the beer doesn't matter to the CO2 dissolved inside the beer; what's important is that it (ie air) is CO2 "poor" compared to the pure CO2 in the beer. The CO2 molecules only "see" other CO2 molecules. Therefore 40psi of air to carbonated beer is the same, from the CO2's point of view, as the keg/bottle being open to the air. The net result is that the beer will go flat - CO2 flat. The other gases in air don't dissolve in water worth a damn, so the net effect is that the beer will go flat.
Now, are 02 and N2 suitable for "carbonation"? I really don't know, but isn't Guinness part N2 dispensed? Given that air is about 79% N2 then it might not be all bad. However the O2 will clearly cause some issues and frankly this screws the whole theory!!!
What sort of pressures are we talking about?
Well, for the nitrogen "widget" cans like Guiness, Boddington's, etc, the brewer does some pretty weird things. And these things involve very high pressures in order to get the nitrogen to dissolve into the beer. On the canning line, a hollow plastic ball or cylinder is dropped into the can. This is the widget. The widget has one tiny hole in it, and believe it or not, there have been many scientific studies whose sole aim were to determine the optimum diameter of that hole. From memory, I believe that the hole in modern widgets is 0.6mm in diameter.
Once the widget has been dropped into the can, and it has been filled with beer, a tiny shot of liquid nitrogen is squirted into the beer just before the top of the can is crimped on. Once the nitrogen boils off, it has nowhere to go but into solution. Over time, some beer is forced into the widget as well. Once the can is opened, the pressure inside the can is relieved. This means that the pressure holding the beer inside the widget is also relieved, and it jets out. This jet provides turbulence, which in turn provides nucleation sites for the dissolved nitrogen to come out of solution. This forms the thick, creamy head found on these types of beers. If you suck some normal beer into a syringe and then ram down on the plunger, you'll see the same effect. The difference is in the lifetime of the head, which will be much longer with dissolved nitrogen, which equates to much smaller bubbles.
I know people who have (and still do) dispense with "beer gas", a 60/40 mix of nitrogen and CO2. Unless you dispense the beer with a stout faucet, the net result is disappointingly flat beer, even with ridiculously high tank pressures.