In terms of perceived display quality, and that's all that matters, resolution is I believe the 4th most important thing.
It's black level, contrast ratio, color balance, and then resolution.
Apple excels at the first 3 (vs the competition).
The resolution could be better, but I've seen the nexus 7 and while the screen overall is good, I could instantly tell that it's not as good as an ipad 2's.
It just isn't. You can tell when watching movies. If i put a number on it, I'd say it's about 15-20% worse. Again, nexus 7, good if not great for the money. And the same song and dance continues with an Android nexus product. You always hear the comment that the nexus 7 screen is good for the money, the tablet is good for the money. When will they say that it's just good, even if it cost the same as an iPad?
It does not seem that the nexus 7 would sell at all if it was $329. And that's fine and dandy, b/c Apple is trying to create an ipad mini segment--the 7 incher affordable luxury class.
If the mini's profit margin is lower than most, then we can't really fault Apple too much yet. A retina display just costs too much right now. In one year, this is when you want to get the mini. But it is curious that an ipad mini costs so much given its A5 internals as well and low res screen. I suspect that Apple's margins are still very high.