Many people were still on PowerPC when Apple stopped supporting them. The fact of the matter is that the first generation iPad mini is sold as an extreme budget tablet to compete with Android's lowest-end tablets. For it to still be sold ought to not necessarily mean that Apple will keep on putting out updates. It just means that Apple is now not opposed to selling things that aren't that great in terms of speed. The iPod touch is on life support. They still sell it because it's still viable as a music player, albeit barely (thank you iOS 8).
Discontinuing support for an old processor does not a software fragmentation make. If Apple continued to sell the fifth generation iPod touch and the first generation iPad mini past the launch of the first version of iOS that couldn't run it, THEN that'd be fragmentation. That's to say that Apple has until the actual launch of iOS 9 to discontinue those products if iOS 9 is to drop support for them. This is not out of the realm of possibility, even if it is unprecedented.
I think people with devices that old are praying that Apple doesn't release an update to the operating system that cripples its performance that much more. Provided security patch releases came out (like what Apple did for the fourth generation iPod touch and the iPhone 3GS with iOS 6.1.6), this will not present a problem to users being left behind...if anything, they are given that much MORE time to enjoy using what they already have.
They won't release an update that won't run on that hardware. They're historically more open to dropping support for hardware if they feel that further versions of the software accomplish nothing (due to lack of the muscle to utilize new features) other than making it unusable.
Yes. For apple it is a decent product still running the latest operating system. However, would apple sell a product which is definitely unable to receive the latest software update? (not iOS X.0.1, but iOS X+1) Yes. I admit that iPhone 4 is still available in certain market. For ipod touch, as a music player, what I want to say is as long as it can install apps, store music, then all would be fine.
Yes. You are right. However, iOS 8 is not only slowing down old devices, but also some new devices such as iPhone 6 and 6 Plus. From now, only iPad Air 2 with 2GB ram is free from bunches of issues. I must say, even on iOS 8.4 beta 3 (Yes, this beta), there are still issues persist. You may say this is a beta software so bugs are highly possible. But after a long time use (more than a month), this beta is very close to a final version of iOS.
So, according to your statement, Apple will likely drop software support when they realize this device is unable to support much latest and greatest features, rather than becoming unusable. If I just simply see this, I may think this is really awesome.
Nevertheless, before WWDC comes, nothing would be finalized. Guessing what they are going to do is becoming meaningless.
I am not a core Apple user, though.