I think the specs race is basically over. Apple's specs allow them to make a fast phone in a small body with relatively good battery life. Android phones are generally made with the same 'generic' parts, and have comparable battery life by virtue of having a bigger case to cram a battery in. But all told, the phones are pretty close together, no matter what tricks each company is playing. (And I would argue that battery life is becoming a more dominant spec request as time goes on. I'd much rather have a longer lasting battery than a bigger screen, for instance.)
At this point, it comes down to being able to differentiate on things other than specs. The Android space is crowded. At the flagship level, everything is pretty close to everything else. Samsung is being reined in a bit on its Android modifications, so what we're looking at now is a bit of a race to the bottom on price.
So the specs for the Fire may be 'tepid', but they're probably not actually bad in any relevant way. The phone will hold up for at least a couple years. Amazon's only chance for their phone is to provide a compelling ecosystem, and they don't actually need to be the leader of the pack on specs to do that.
I don't disagree that this phone isn't actually that compelling, but it's not the specs that are sinking it. It could have top-of-the-market parts in there and you'd still shrug at it because the OS and Amazon integration just aren't good enough. The device just has too few merits to warrant much attention, in my opinion.