redisburning
Well-known
Redisburning: Why a push toward smaller sensors? Moore's Law, for one.
And why a smaller sensor? Smaller, lighter cameras, for one. Hey, wasn't that one of the big selling points of the Leica when it first came out? Anything that moves that ball further down the field is all right by me. If you've ever spent a day hauling around a bag of Nikon Fs and lenses, you'll appreciate smaller, lighter cameras.
As to your comments about lenses, I think another commenter has answered that. But taking your position to its logical extreme, then maybe we should all still be using view cameras and lenses, because after all, smaller doesn't necessarily mean that much better.
moore's law actually makes certain that full frame will never be surpassed by smaller sensor technology of the same kind as long as it is not abandoned.
and really, the M9 is not a large camera. let's compare it to an m4/3 camera:

so, it's what, 20% bigger? but the sensor is 200% larger. that's because relative to the camera body, the sensor is tiny. if you can reduce the size of the necessary circuitry and computers in the camera, then you will do loads more to reduce the size of the camera than simply reducing the size of the sensor.
as far as your last point, well the thing is that 35mm already has low yield rates relative to these smaller sensors. that appears to be the current best combination of economics and quality for most working professionals right now.
I would be considerably more convinced by this argument if the only full frame cameras still available were the Canon/Sony/Nikon ones. but Leica has already demonstrated that you don't really need to go that much up in size to get a significantly larger sensor. now, if only they could do that with regards to the price!