I'm thinking that if you're in the market for a $3600 Internet-connected fridge, you can afford and would just rather have the iPad.
I don't know enough about the Fire to say whether it's a piece of garbage or not; all I know is that I have a bunch of iPad apps that I've paid for and Apple's ecosystem makes it easy to add another iPad and transfer my settings over.
I have a 2013 Nexus 7, and we just got the $50 Fire for the kids while it was on sale. The Nexus 7, even for the "2013", is still a perfectly credible Android tablet, with "full HD". The $50 Fire is 720P, so the display is noticeably worse, but, that probably actually helps with its performance. Otherwise, that $50 Fire is really only slightly slower than the Nexus 7. I even played some MinecraftPE on the Fire, and it was just fine. I didn't have an FPS meter but it was at least 20-30. (I wouldn't be surprised for battery reasons that the game is capped at 30 anyhow. Given the nature of the game and the input I can't tell if the FPS is going much higher on any of those two devices or my last-year's Moto X, the most powerful Android device I own; not enough action.)
It may not meet a techy's high-end needs, but the $50 is perfectly credible now. Not like a $50 tablet two years ago, which was slow, had an immediately-noticeably-crappy touchscreen, and was latent in everything it did. I suspect Amazon's still subsidizing it a bit even at that price, but probably not that much. Those SoCs are really pushing things along. (Pity they're so proprietary.)
Going off the usual price for apps ($2.99?), and a 'bunch' is probably about 25 apps, then replacing all your paid iOS apps with paid Fire apps would probably cost you $75.
So ignoring anything else, a lot of people would actually value their $75 sunk app costs greater than the $350 difference between that iPad and the Fire. It's a pretty interesting lesson in humanity.
App store availability aside (many apps are available on iOS that are not available on Fire's outdated Android derivative), Android tablet apps are kind of crappy. Apple wouldn't be able to get away with their premium pricing if the experience on Android were better.
Every review of an Android tablet complains about how the software is buggy and the ecosystem isn't there yet. Still. Again, I was never convinced there was a larger market for tablets; just a market for iPads.
Pertaining the sunk cost fallacy you fell victim to in your second paragraph, unless you have $350 of apps that you need on the iPad (or if you plan to play music from your fridge, which actually would be cool), you're going to be better of paying $49 and spending another $50 for accessories and apps that you "need".
I don't know enough about the Fire to say whether it's a piece of garbage or not; all I know is that I have a bunch of iPad apps that I've paid for and Apple's ecosystem makes it easy to add another iPad and transfer my settings over.