The alternative you suggest is related to biometric key binding (http://www.cs.cmu.edu/~vboddeti/key-binding.html).
But if it were as easy to get access as the article suggests...
I agree you take the right approach by identifying adversaries. And I agree that it's relatively reliable against kids or random people randomly screwing around. And not against governments.
But there's a whole bunch in between that. Business competitors? Ex-partners or personal enemies, motivated enough to hire a private detective or similar that can easily do this?
I think the line of "reasonable defense against" for this technology is actually probably _just barely_ above random people screwing around with your phone because it was just lying there. And there's a whole lot above that but below national intelligence agency.
When you think about security, you should have in mind who you are protecting against, and the same applies to passwords.
Security purists love to advocate that password reuse is evil, but who in the first place is going to be your attacker and for which purpose?
For example, in the context of money (online banking, paypal, ebay, etc.) I completely agree that password reuse is evil.
But when it comes to random websites, or simply to access my devices does it really matter? The first time I saw the Chromebook my first impression was "do I really have to write my entire Gmail password EVERY TIME I want to access this thing???" With my Galaxy S5 I was like "Don't tell me how should I create a password to unlock you!!! If I want to use 0000 it's my problem!!!"
I personally like the approach of FastMail: Different Login methods (like using Google Authenticator to generate random one time use passwords, or the ability to create different plaintext passwords). You decide which login methods allows you to access your account, and which ones allows you to manage it.
You don't know, that's why password reuse is evil.
Years ago when I made my Facebook account it used the same password as all my other accounts. Now that I use Facebook as an OpenID provider for pretty much any news site I would be exposing myself and my friends to all sorts of attacks if someone found hacked a phpBB forum that I frequented years ago. You could make the argument that only important sites should have unique passwords, but you, your grandmother, and I all have a different definition of important sites.
OpenID isn't being attacked or at fault, it's non-unique passwords.
If you have secrets that are very valuable, you are outside the standard use case, and should probably use more advanced authentication.
Your kids screwing around with your phone? TouchID does the job.
Random people screwing around with your phone if they find it? Same thing.
Government gets ahold of it? Yeah.. notsomuch.
Considering that the primary adversaries of an average smartphone user are other mere mortals, not dedicated spy agencies, a fingerprint login strikes a very good balance between usability and security.
Consider the alternative - either requiring a standard alphanumeric password on unlock (just about zero usability), or a 4 digit pin code (less usable than the fingerprint while providing identical, maybe slightly less security than that option), or more likely than not, no password of any kind, the whole touch ID thing is a massive jump forward in the security posture of the average iOS user.
Most iOS users I know have it enabled simply because it means they don't have to keep re-keying their app store password.