So what's your suggested alternative account? How does one get all those references in a way anywhere as likely as the original theory? We have zero cases of "House of David" referring to anything else, and "House of" was a typical geopolitical term. We do have direct evidence the Kings summations have basis in fact for later periods, but for earlier period the author isn't really redacting the royal annals despite him saying he did?
Minimalism presented itself as based on the science, but it can't coast anymore on absence of evidence. To be credible it ultimately needs to explain what we have without taking leaps of logic equaling those of the literalists, or it would appear to be a political movement rather than a scientific one.
What's my suggested account? I don't know. Perhaps David and Solomon existed but their reigns were exaggerated for political and/or nationalistic reasons. Perhaps they were invented out of whole cloth for similar reasons. What I'm more certain of is that the Biblical account here is questionable in a way it isn't in later periods.
The Judaen Kingdom should have known basic information about its history, lying from whole cloth or portraying its founders in that light isn't very useful to them. Everyone else who comes to rule that area later is made to be illegitimate (by implication) and it's not in the interests of the religious classes either (usually not big on rebellion, except the Hasmonean which never claimed to be descended from David and had their own text).
I think reading Kings as a ancient text with all the typical flaws for the time is the right way to go about it, and the only way we can piece together the evidence (for now, barring some new discovery). Many ancient texts give absurdly inflated counts for armies engaged in battle, but we usually don't follow that by "battle never happened".
That's not the case for well established civilizations in the Middle East. We know a lot of archeological information about big cities and empires of the time. The "empire" of David and Solomon is just not one of these historical cases. The only place that mentions a wealthy empire run at David's time are the stories conceived by Israelites hundreds of years later.
In the same token, even a straight reading of the text should never give us the term "Empire" regarding David. His Kingdom fights against the very close neighbours and often wins, but is prone to drought and civil war. Even winning fights against close neighbours isn't much of an indication of Empire - when the US wants something from Mexico, it doesn't have to fight for it.
So I agree with you, but I think half of the exaggeration is due to more modern readings and (in this case) strawmen invented by people looking for something to knock down - the only person referring to "David's Empire" in the linked text is... Finklestein.
* Basically: We have no archeological evidence for Exodus and conquest. In fact, what we have doesn't seem to match conquest at all. However, once monarchy and actual government sets in (around David's time), we get bookkeeping and the record is accurate once one takes into account the significant authorial slant.