A great post by the OP
He is right to raise that question.
It is much easier to make a given-performance lens for APS-C than for FF (apart from the wavelength-of-light diffraction limit on resolution, which dictates bigger diameters, but that is a very marginal issue in handheld photography).
JeffB makes great points too.
FF's shallow DOF means that landscape photography is probably mostly done at f8, even with a $2000 f2.8 lens
Most lenses are sharpest at f8.
FF is just another sensor size. It is arbitrary - same as the 35mm was chosen for some then-relevant reason all those decades ago. In the digital world FF has no special meaning.
There will be a continuous quest for ever bigger sensors because more silicon = more data collected = better quality photos.
But Marketing will always dominate which is why the biggest R&D money goes into FF - because you can sell expensive cameras and get the payback. So, the K1 is a way better camera than say the K3. It has much better focus for example; something which should be completely irrelevant to the sensor size. I had the K3 for 2 years and I am amazed at the K1 each time I use it (except for the 1.8kg with the 24-70 f2.8!).