I think you're right. It's not for everyone, but I think it's a cool device.
Look at it this way. It's a real computer for a digital road warrior, but it's a supplemental machine. Pop it in your brief case and go. No extra bag, no need to lug something around on wheels. Sync everything when you get home. Yeah, it's a little delicate, but if your environment is offices, conference rooms, and airports, this could make sense for you.
If you lug your laptop once or twice a year, you're probably not the customer for this. If you're schlepping it every day, with case et al, this may be an attractive little machine for you.
While I agree with you for the most part, I think Apple could have done a lot to broaden the audience, without changing the dimensions of the machine very much (if at all).
I am one of the people that this machine was meant to appeal to. I travel with my notebook constantly. It goes to work with me every day and sometimes out on my own personal time. I like ultraportables and have owned a number of them (Dell Latitude L400, C400, X300, D420 and Inspiron 700m).
One of the things that the very thin ones have is a clip on "base" (I like to refer to it as a "dock") that increases the width, but is still manageable for travel and adds many of the ports and an interchangeable optical/floppy/extra hard drive bay. This does increase the price, but then people that buy these machines are used to paying upwards of $1500.
What ticks me off about the Air, more than anything else, is how cheap Apple went with the accessories. For that kind of money, they could have at least included a USB Ethernet adapter, the optical drive, or even just an Apple remote (yes, that is an extra cost item!).
I could live without the extra ports, I think - but I'm going to hold off on this one.
I don't think Apple hit the ball out of the park with this design and I have a feeling that the price will be going down - or that we'll see an early redesign if they intend to keep the price point where it is.