So basically the VWP country's passport user has to have a history of being admitted into the US using an ESTA at some point prior to using the APC kiosk?

After 2008 (or, more precisely, around mid-January 2009), VWP countries' citizens seeking to fly into the using the VWP had to have an ESTA. [By that time, IIRC, all VWP countries had transitioned to an ePassport, but that wasn't demanded (by the US) like an MRZ. Is that correct?]

If "the industry" wants to phase out GE kiosks or combine functionality, does the industry also want to eliminate GE members being fast-tracked to a kiosk and/or CBP staff? I've seen horrible lines at BOS for APC kiosks and who knows what else, and it was backed up so badly that GE members couldn't even reach GE kiosks unless they got lucky with a call for GE members and/or cut past the line/mob to make their way to un(der)utilized GE kiosks at the same time.

The problem isn't underutilized GE kiosks or even as much about too few APC kiosks (albeit those are issues too) as it is that people are slow users of APC kiosks and will keep fumbling around on their once or twice a year international trip for years and years to come. The slow track crowd at APC kiosks are much the same crowd as the slow track international flying crowd at airline self-service check-in kiosks. These APC users are unlikely to ever be as fast on average with finishing up at the machines as GE kiosk users.

I can see why some airlines may want this to happen, but this would not be an improvement for GE members -- which happen to form a much more lucrative demographic group for the airlines than the average passenger on the same flights. Not that this will stop airlines from wanting the federal government to pick up the tab for the APC kiosks and get more space for them.