Sure, alt-coins are mostly useless aside from speculation, but they are still a non-fiat store of value, with most of the advantages of Bitcoins, and they aren't directly tied to bitcoin price so one can diversify and hedge against BTC volatility, somewhat, because, as others astutely observe, often LTC drops when BTC does. I suspect they will gradually decouple given time. A lot of folks round these parts also like PMs, and PMs are in a similar situation - it's very hard (except in a few locations) to find a brick-and-mortar store that accepts gold or silver. Yet, it is still used as a non-fiat store of value despite its current limited utility as a currency. I might find a random vendor on the internet who is a total FTC nerd and accepts FTC for whatever the vendor sells, but in the meantime, it's a mainly speculative potential hedge against fiat that's worth maybe 0.3% of my portfolio just on the chance that it pulls an LTC (I remember buying x000 LTC when it was a few cents... and now it's $3-4. Lucky me.)
Your claim that alt-coin market caps and resources are taken from bitcoin is an overstatement. Sure, a lot of that is money that would go into BTC, but also a lot of that is money that would make BTC more volatile. And much of it is simply money that WOULDN'T have gone into BTC at ALL if those coins didn't exist. What am I saying? Yes, that some people actually plan what percent of their portfolio goes into what assets. Perhaps, with a more diverse choice of "stable[-protocol] cryptocoins" than just BTC, Dude A might be comfortable putting 5% more of his portfolio into the cryptocoin asset class.
So while a portfolio might look like this - 80% fiat and fiat-based crap, 10% PMs, 10% BTC - maybe for some investors, it might look like this - 75% fiat and fiat-based crap, 10% PMs, 9% BTC, 3% LTC, 1% NMC, 1% PPC, 0.5% DVC, 0.5% FTC. Etc etc. So you see that SOME money was taken from BTC, but some was simply additional investing.
