The iPad Mini is too big
A small tablet is not supposed to be 'large'. It is not a winning point of a small tablet to be bigger than the competition.
The truth is that the Mini is not 7.9" because of concerns for the user experience, but because of constraints in how iOS handles resolutions. Apple is stuck with using 1024x768 or 2048x1536 displays, the latter probably too expensive or difficult to make with today's production processes. Embedded in this is also the 4:3 form factor which means that if Apple had made an actual 7" diagonal tablet, it would've been shorter than the N7 or Kindle, worse for reading, browsing and gaming, and would've looked like an awkward little square.
The iPad Mini is 7.9" not because it's 'better' but because the alternative was unfeasible, and it is too big. It simply lacks the portability of a proper 7" tablet. The Mini is a compromised product and not really that great for any of its use cases.