I believe you have nailed the shortcommings just right. It has half-way step to what you suggest and in that it realy should have those features. Also given the price of this and the ouya (also not released yet) I'd say some people were asking some questions about price also.

This and the opertunity to add google tv to the device from the start would of been to good a opertunity to miss that I feel that could be the main reason there stepping abck a bit and doing a rethink now instead of carrying on a unstable path.