It certainly is true that if more distance runners tried walking, the competitiveness of walking would increase. But not all runners would have the flexibility and technique to excel.
World class walkers tend to have more pounds per inch than world class runners- even at very low body fat, they are heavier, and I'm no sport scientist but the center of gravity does not lift as high in walking as in running, so the body types that excel are not exactly the same.
Regarding the running ability of walkers- the best runner who walked on the (junior) national level that I am aware of was 2nd in the 1981 and 1982 Jr. 10K walk championships and made the US junior team as a walker in 1981 and 1982- at the time, he was a state HS champ in XC and 3000m run, and ran 3:45 1500m in college and was a very strong D1 XC runner in college.