I jumped in on the same deal, OP

I ended up picking up the Kindle Fire from the Trumbull Target, like the OP in Slickdeals.
My impressions with the KF was pretty much the same - I was quite disappointed. What the OP wrote pretty much mirrored my initial reactions and have seriously considered returning it. I could be wrong about Target's return policy but my excuse for not returning were because the KF was a pretty decent deal and Target won't accept open-boxed returns (I could be seriously wrong here, but again, this was my 'excuse').
I already have a MBA, iPhone 4S and an iPad2 so really had no reason to keep my KF. However I decided to give KF another chance and played around with it.
I think Amazon seriously crippled the device with their own version of market place and modifying the OS. It sure makes the Kindle experience streamlined for, well Kindle, but that was it. I got bored playing around with just my books and browsing with Silk. One thing that resolved a good number of my problems was rooting the KF and installing Google's MarketPlace. The process was simple enough and I was able to install apps that Amazon Appstore wouldn't allow. In addition, Google's MarketPlace recently implemented a mechanism to check for compatibility and I wasn't able to install a number of apps that I knew worked on the Kindle. For example, I couldn't install Dolphin HD app from either Amazon or Google MarketPlace. I ended up downloading the apk from SlideMe marketplace. Inconvenient, I know, but it worked out in the end.
What I like about the Kindle overlaps with what I don't like about it really. I like that it does what it's designed to do - to read books and handle media contents. I like the 7" screen for more casual outings and how I don't get distracted with the hundreds of apps I have on my iPad. (Well, I could download the equivalent apps on my Kindle but...I already paid for the same apps on the AppStore, why would I spend money on the same content on Android?) I already had Amazon Prime before I got the KF so that wasn't an issue either.
In the end, for the $123 price point, I think KF is a decent gadget to play around with. That said, I'd argue that it won't ever reach the potentials of an iPad and would strongly advise against it if someone I knew considered buying a Kindle Fire instead of an iPad. As with the price point, regardless of the manufacturing costs, $199 is just about the maximum I'd pay for a KF. If it wasn't for the 'deal', I probably wouldn't have considered to even play around with it.
Bottom line, it's a decent device to read books and carry around a 'smaller pseudo-alternative to an iPad', but it lacks in so many departments that it wouldn't ever replace my iPad.