Of course, I'm skipping over some technical details, but that's basically the gist of it. Also, I should mention that it's much easier to crack one card in a couple of weeks and clone it 1,000 times than having to crack 1,000 separate cards to clone them once. And also, some chipped cards are allowed to be used without the pin, because not everything on a chipped card is encrypted, and that's ok for some businesses because they'll limit the amount of the transaction when the pin is not used, and also they can take other security measures, like video recording the person, or video recording the car of the person who used it, or something else entirely.
Not your fault as your points are sound, but I find your statements to be a bit ironic. You see, you started your post because somebody bitched about how the chip does nothing in the USA except delay the whole process. I guess you don't know because you're not like this, but the people who say stuff like "The chip does NOTHING in the USA except make the whole process take longer." are also the super paranoid people who find everything to be an invasion of their rights, so they'd also never agree to your suggestions of videotaping their cars, the transaction itself, and so on.