They had to get it out as fast as possible, in order to keep as many developers as possible on board.
(However: Note that "as early as possible" doesn't mean that it was ok to release a product that clearly wasn't ready.)
IMHO they should have concentrated on either the phone or the tablet, to make sure that they released a polished product, instead of splitting their ressources by working at the Veer/Pre3 and TP at the same time.
(I don't know about webOS on phones, but webOS on a tablet is clearly an immature product: Slow, clunky and bug-filled)
And yes, price it 1-200 dollars below the iPad at launch, to compete on price and also because an iPad as the situation stands right now, clearly offers a better and more complete experience.
And lastly: I disagree that "there is no tablet market, only an iPad market". Android tabs allready have 20-25% of the market, and will only grow. But its a marathon, not a sprint. Making the Touchpad a success would have taken 2 or 3 years of pouring ressources into the platform, before seeing a return. HP wasnt willing to take that gamble.