Sorry that didn't work out for you. You didn't say you wanted to use the keyboard and mouse for input, sounds like air display may have been better for you(assuming you can mirror with air display). I love not having to pull out my wireless desktop set up and using the iPad as a 9.7 inch trackpad. You still should be able to use the KB with VNC Viewer and use the iPad for the mouse. The main appeal for this setup to me is not having to deal with extra stuff, just grab the iPad and git er done.
It works well except this mouse things... I can still use the iPad but with less comfort thant expected. I d'ont know if this "issue" can't be solve with an other VNC Client such as iTeleport. Any idea?