I really have no idea how that is in any way rational. On a Steam Machine, you don't need to pay monthly for online games, and you have some of the cheapest game prices around, with access to great value in both Steam sales and other distribution methods such as humble bundles.
As for the rest of your points, Valve themselves state that they aren't really targeting "mainstream" purchasers with Steam Machines in the near future. By 2015, the standard pace of hardware advancement will have made sure that many manufacturers they can offer good performance vis-a-vis the consoles at a very competitive price point.
Finally, a large number of your points read similar to what people have been saying about Android phones compared to the iPhone: the availability of many models was supposed to confuse customers, and the ecosystem apparently suffers from extreme drawbacks due to "fragmentation". Well, Android market share is now above 80%.
I for one never made those types of claims about Android because I saw its one biggest advantage versus iOS - the lack of a proprietary ecosystem that refuses to 'talk' to other ecosystems. You could say that I'm making a similar mistake with consoles, after all Xbox Live doesn't 'talk' to PS+, and neither of them 'talks' to whatever Nintendo has... nor do they 'talk' to PC gamers online. However, it's an apples to oranges comparison that shouldn't even be made, because you cannot compare the gaming sphere to the cell phone sphere. (I go into this more below)
Regarding paying for online play: I've gamed on PC before, and I don't mind paying $4-5 a month for online play on consoles because the overall experience is better and more consistent. I've played on PCs going back to the days of zmuds, through the first formative years of MMORPGs, online shooters, racing games, etc and to this day I would not sacrifice the online gaming environment that my console affords me for the 'free' online gaming environment of PCs.
The ONLY thing I see Steam OS really having as a competitive point in its favor is the pricing of digital distribution games. But as we saw up to and through the XB1/PS4 launch, the market at large is just NOT ready for digital distro as the go-to for game distribution in the way that PC gamers (and more specifically Valve/Steam users) are.
Sure, by 2015 they should be offer Steam Machines with power equal to or greater than PS4 and XB1 consoles at a competitive price point, but by then the PS4 and XB1 will be established enough that it won't have an impact. People teetering on the fence will likely buy whatever the majority of their friends have, which will be either a PS4 or an XB1.
And once again I have to go back to the point of fragmentation. You're comparing it to the cell phone battle and the 'fragmentation' in Android phones due to the variety of devices and configurations available, but that is not an apt comparison. You can't compare apples to oranges. Cell phones' primary purposes these days are still making phone calls and texting. Yes, they have web browsers. Yes, they play touch screen games. But by and large they are still first and primarily purchased as communications devices, and in that sense having a vast array of different products that are really only primarily similar in which OS they run (Android vs iOS vs Windows Phone) doesn't have nearly the impact that it does/will in the video game space.
There are over a hundred million console gamers that buy consoles due to their ease of use and simplicity. Most of us have zero interest in having multiple variants of our hardware. We want to know that the product we buy a year at launch is going to be the same product games are being designed for 3-4 years later. I don't want to buy a Steam Machine in 2015 knowing that there is every likelihood that a game released in 2019 is not going to run very well on my rig, forcing me to purchase a new one or upgrade my existing one.
I know some folks are hoping that this console generation is shorter, but I personally feel that the 7-8 year generation that the 360and PS3 had was fantastic. The value dollar for dollar if you don't care about bleeding edge graphics was insane (barring RRoD of course). So long as they offer us stable hardware that doesn't break, I'll be perfectly content if the XB1/PS4 generation lasts 10 years, because it means 10 years of knowing that every game released on my console is going to run just fine because it was made with that hardware in mind, not a hardware iteration that's going to come out 5 years after I made my purchase.
You say yourself that Steam isn't targetting the mainstream now. If that's the case, when do they think they'll be taretting the mainstream, if ever? When PS5 and XB2 are on the horizon? Because by then in order to 'beat' the 8th generation consoles' performance, they are not necessarily going to be competing at a very competitive price point, especially since console manufacturers are historically willing to take a loss on hardware to get it into the home, and Steam Machine manufacturers will likely not be willing to take that same loss because they aren't going to be collecting royalties on games.
I stand by my assessment that Steam Machines will likely remain a product for already existing PC gamers that choose to buy them over building their own rigs. That's just fine and there is a market for that. I do not think that even in 2, 3, 4 years' time Steam Machines will be a competitor in any other gaming market space other than that, certainly not as a direct competitor to consoles.