I partially agree with you, in that the rendering of the page is good-looking in circa 2007 standard on a mobile device. But rendering one page nicely does not prove it is full-featured. It has to go through some kind of benchmark, which reflects the general ability to process trillions of other pages out there. It loses to Opera Mobile or Symbian browser on the test I just googled (not sure about how accurate it is though).

A full-fledged browser experience in 2007 to me means at least I could have mouse hover, to deal with sites not yet adapting to mobile computing (there were a lot of them). WM6 browsers did that. If it fails, I'd go and use my Palm device to VNC into my workstation -- a 2004 Sony device that will be up-to-date forever because it is a decent thin client.

I also remember opera mini being a very handy browser on lower end phones like the S40 models. Since the first iOS safari does not do javascript IIRC, it makes no difference if the rendering is done with WebKit locally, or pre-computed on a server. The only difference is that iPhone has a bigger viewport, which allows you to consider the webpage a minified version of the desktop rendering -- and you are able to freely swipe, zoom, rotate -- not relating to the functionality of the browser itself. I'm not sure if you would agree, but I think, if iPhone1 runs Opera Mobile (with beefy 128MB RAM and fancy graphics chip), it beats the built-in Safari to the ground.

Of course it will cause other troubles -- battery life, thermal management, slow startup, or even unstability etc. This is, to my understanding, why Apple decided to ship a "reduced" version of Safari3.

Edit: adding explainations.