So the tablet is going to run iPhone OS I guess? Epic fail.
I really don't understand why you would call this an "Epic Fail." First off, there is a lot of specialized software already capable of running effectively on an iPhone/iPod Touch that goes from POS (point of sale) through medical applications that even include plug-in devices using the 30-pin dock connector for I/O. To give these apps access to a larger, easier to read screen and potentially even add new capabilities (I honestly expect iPhone OS 4 to follow soon,) then this is far more likely to be an epic Win rather than fail. Just because it's different from what you want doesn't mean it can't do the job just as well or even better.