Actually, I believe that the late night wars could still exist. Keep in mind that since IYTL Letterman will be hosting the Tonight Show, it leaves the Late Show without a host for 93. I can't be entirely sure, but it might be plausible that CBS might be willing to be experimental with a then unknown like Jay Leno. I'm not sure though. What do you think?
Leno was known, he was the permanent guest host of the Tonight Show. However, he was not as well known as Letterman, and certainly not as revered by younger viewers that the networks pursue. What got the ball rolling on the entire late night shuffle was an offer Leno received from CBS in the late 1980s to start his show. Helen Kushnick, Leno's agent, leveraged that into a deal from NBC and she began a behind the scenes effort to push Carson out. Carson could have gone on as long as he wanted, but NBC executives were starting to notice (is there a word for preconcern?) that Carson's ratings, while rock solid, were graying and the average age of viewers were slipping into the 50s. I'll join everyone in praising the Late Shift by Bill Carter, it's a fantastic summary of the events and a really quick read.
I suspect that the Tonight Show would still be in first place if Letterman took over. Letterman's ratings decline coincided with a general decline in CBS' fortunes, including the loss of a ton of good affiliates and NFL football. Meanwhile, NBC had monster ratings multiple nights a week with Seinfeld, Friends, Fraiser, ER, ext. A lot of the Conan people always thought that a road cone could have snagged ratings victories over CBS at the Tonight show during the late 1990s.
CBS would probably snag Leno, and he'd run an almost identical show to the one he ran OTL at NBC. I don't know if he would create quite the franchise that Letterman did with the Late Show, just because Letterman had a massive amount of buzz when he took his show to CBS.
Here's Letterman's first show on CBS, it looks like a straight up party atmosphere, loose, fun. We take a lot of the stuff he does now for granted, but even stuff like his graphics package is a decade ahead of what Leno was doing with the Tonight Show on NBC in 1992.
Other odd thing I don't think people realize, Leno was doing the Tonight Show for about a year with Letterman doing Late Night after him because Letterman was still under contract, so he had that chance to really connect viewers, and it just never really happened in 1992. Leno eventually grew into the role, has an unheard of work ethic, and excelled at his strongest trait-- the opening monologue. However, his first year of shows while Helen Kushnick was running things were really rough.