I think you're right in a lot of ways, but wrong in two specific ways. It does come down to preference. For those that want a smaller form factor I hope Apple keeps the 4" phone (I think they will). Multiple sizes makes sense because we all have differing opinions on what's best for us.
Where I think you're wrong.
"Others are willing to sacrifice some functionality and the one handed ease of use in order to have only one device. "
There is no sacrifice in functionality when using a larger phone. One handed use is no easier than two handed use. Are there instances where one haded use is more convenient? Yes. But there are just as many instances where two handed use is more convenient as well. As you admit yourself, 4.7" does not preclude one handed use.
"I am an advocate of sticking the phone app in the mini and addressing those that want the phablet."
I know it's not your word, but I think phablet is stupid (IMO). Regardless of that, 5.5" phone is a long, long, long way away from an 8" tablet. A phone app in the mini in no way addresses someone's desire for a larger phone. It's an extreme edge case argument meant to exaggerate someone elses displeasure for a larger phone.
I hope we both can agree Apple is in a pretty good position. They can continue to offer the 4" factor while possibly gaining new customers with a larger phone. Win/Win. Apple has gotten some of my tablet money (iPad - also have Nexus 7) and some of my laptop money (MBA). With a larger phone, they could be a choice for my phone money. Without a larger phone, the status quo will remain.
I think we are in general agreement especially about Apple and their position. And yes there are use cases where one handed is more convenient -- note I did not say faster or productive, but convenient. I walk to work or take the bus and I like so many others are typing with one hand while holding something in the other hand, like a purse or a coffee or whatever. Here if I had a huge phone/phablet I could not do much other than stare. Siri is also not practical in a crowded bus IMHO, although I will admit to seeing certain people screaming away on the phone. Bottom line, for me and for many people being able to use the device one-handed is a real requirement.
As far as the phone app, I really see no issue with sticking it in any cellular enabled device regardless of size. Again, it cost them almost nothing to do it and they might get a few extra sales out of it. Of course, it is possible that their real strategy is to continue to move people towards facetime and facetime audio that could eventually circumvent cellular companies altogether. But that would require them to open it up to other vendors which was the original promise. My point here is why not let people talk from any device regardless of size. I use facetime to talk to my friends on the other side of the pond with no issue from all of my devices (I am fortunate that 90% of my friends are Apple users). Until Facetime is ubiquitous across all platforms, however, why not give them the phone app on all devices.