I have played with a RIM Playbook once and the size factor was the same concern. Seems like under 9-10" it can't be a replacement for my laptop in any situation and it feels more like a toy.
(Disclaimer : I own an iPad)
There's also all kinds of reasons to promote the Fire in hands of children. Unlike regular geeky gadgets, Amazon is targeting women just as much as men, and you can market to mothers via their children. Plus, if you can get your products into the hands of children, you are establishing an entire generation of future customers. That's why Microsoft et al cut students and Universities such massive discounts on software and hardware.
Full-color children's books is also a distinguishing selling point for upgrading over the black-and-white Kindle.
I thought what you were trying to argue was "Your tablet can never be a replacement for your laptop. Period."