It's an interesting "what if" to wonder how things would have proceeded had Denethor lived and survived.
I doubt he would have given up power as easily as Faramir did.
But I think Gandalf's point, subtle or not, would have been "go ahead and dispute it and refuse it, but be prepared for the consequences." I think there has been a former posting of one of the articles that points to that: "Mene mene tekel upharsin." Sauron had his signals. So did Denethor.
And I agree with you: Denethor would not have given up his role as leader so easily.