I don't think he did miss the point - he was merely stating that no product can exist without price sensitivity to the market. The cost of parts (CPU) going into the MacBook were substantially more expensive, and thus cost had to get cut somewhere else in order for the product to remain at a relatively similar price point.
Putting your matter-of-principal aside (that you think that all macs should have a dedicated GPU because, well, it's Apple), the fact remains that the integrated GPU in the MacBook was still a dramatic improvement over the dedicated radeon that preceded it. We've got a 1st gen MacBook at home, as well as a 1.33ghz iBook, and lemme tell you, the difference is night and day.
So, considering the following:
1st gen Macbook faster than iBook/PowerBook
1st gen Macbook graphics more powerful than iBook/Powerbook
1st gen Macbook cpu 5 or 6 times as expensive as the preceding PPC cpu
How can you argue that they cut corners? Sure it's a different configuration, with a shift in the approach to a core part, but if they're improving the function significantly overall while hitting the same price-point (more or less) and keeping the machine accessible to their market, then what's the problem? For the price of a Macbook I don't expect perfection - I expect 'pretty good'.