The increased weight, and size is due to the need for a larger capacity battery to drive the retina display. Pushing more pixels and the need for more backlighting to illuminate 4x the pixels creates a higher power demand, and Apple didn't want to sacrifice the battery life.
Now, I will say the Retina iPad Mini is actually probably one of the best value purchases in the iPad line up (arguments for more storage space aside) and I suspect Apple actually has lower margins on the Mini than the Air. The iPad mini, internally, is identical to the iPad Air (except for a minor underclocking of the A7, most likely for heat issues, but physically its the same chip). This means that for $100 less you're getting the same internal components of the air, and I suspect the cost difference between the 7" display (which is higher DPI, lower yield, and newer technology) and the 10" are negligible, and definitely not on the order of $100. This also means that by paying the extra $100 over the non-retina mini you're not only upgrading to the retina display, but jumping 2.5 generations (A5 to A7, including the A5X) as well. You're essentially getting the premium performance that was once associated with the full size iPad for $100 cheaper. The screen size is a personal preference choice, obviously, but the value is hard to argue. Its essentially the same jump in performance from the iPad 2 to the iPad air for the same increase in price, and I don't think anyone would argue that isn't a worthwhile upgrade.
As an aside, the iPad 2 to 3 transition featured the jump from the A5 to the A5X, which was essentially just graphical improvements to drive the retina display with no relative increase in processing power. This led to the poor performance issues seen in the iPad 3. Its not really the same as what we're seeing here since you're going from the A5 (same as the 2) to the A7.