Yes. Clearly Amazon is trying to compete with Apple by stripping out some of the features and specs of the iPad to deliver a less expensive device. It's not intended to be a perfect facsimile of the iPad, just a device which can offer a somewhat similar experience for substantially less money. People will expect less out of a $200 device than they do out of a $500 device, and Amazon is hoping that they cut costs in the right places to make a device that people will buy.

Well more accurately, it is both expensive and inefficient. The best catalysts (the ones which operate at the lowest overpotential) are often expensive iridium oxides. Catalysts made from more abundant elements tend to require a higher applied voltage, which reduces the efficiency of the system. That said, if you're burning natural gas to make electricity to split hydrogen from water, you're much better off steam reforming the methane directly to hydrogen in terms of efficiency.

Yes, H2+O2 -> H20 But in your engine, you're going to have more then that. H2+O2+N2+CO2+bits of lubricant -> H20 + NO + CO + CO2 + etc