Your definition of trade-off seems broken. If I can make a car much bigger,
  or make it much more fuel efficient then that's still a trade-off even if I
  decide to make it a little bit bigger and a little bit more fuel efficient.

There's nothing wrong with my definition of a trade-off. What you're pointing out here is that all design inherently involves trade-offs, which is just a simple fact. Your previous post, however, makes the FUDdy suggestion that people are going to get something worse than before ("I believe smaller pixels means less light gets through, it's more work for your processors which means less battery life etc.")

I guess it's possible that when you talked about "less light" and "less battery life", you were speaking in reference to theoretical maximums which Apple could have chosen to individually pursue at the expense of all other factors, as opposed to the display quality and battery life of existing phones. In which case, you were simply stating a practical fact and not offering a criticism. But it sure doesn't sound that way.

  They are of course making lemonade from this particular lemon via marketing
  in an attempt to counteract the benefit that rivals will receive by choosing
  the screen with the best balance of quality/price/battery at any particular
  point in time for their devices.

Where and what are those devices?

  let's shout this metric from the rooftops because as any longtime Apple
  follower (like myself) knows, it's only "about the total experience" when
  you can't actually beat them on the raw figures.

You'll notice Apple continues to emphasize the experience here, which is why they bothered to talk about human optics rather than simply dumping the 326 ppi figure and moving on. And sure, they like to brag about specs when they can, but it's the fact that they're fundamentally about the total experience that gives them the highest customer satisfaction ratings.

  If you happen to be forced to use a spec that by your own marketing is higher
  than actually necessary or visible most of the time, then that figure becomes
  vitally important since no-one even wants to match it because they want to
  focus on the "total experience" rather than chase your metric.

Nobody was forced to do anything. 960x640 was a particularly convenient choice for two reasons: it allowed them to have maximally sharp text and images, while sidestepping problems that arise with scaling apps for previous devices by non-integer values.