Why they couldnt just do a 1x multipler micro contract for the Dow. So each tick was $1. Looks like it was pure greed on CME part, the smaller they make it the more they get to collect in fees.
Look at this as an opportunity to start your own exchange. You can show that mean ole CME what generosity and compassion looks like.
Because primary competition of the micros are index ETF's. The increment makes it possible to deploy near perfect hedging and other strategies, in some cases removing or minimizing the need for index ETFs altogether. Fees are just normal business. Few if any ET'ers can trade, lets say 50 SPY or DIA, for sub $1 all-in round-trip, and significantly less if an exchange member. Here's a quick equivalence refresher... http://tastytradenetwork.squarespace.com/tt/blog/equating-futures-to-etfs