I know you are torn between liking and not liking Teddy Tank. But, put it this way you mentioned that "your daughter had a Betta Fish Tank for one week and forgot about caring for the fish." Teddy Tank brings that engaging aspect that your daughter would have liked. Feeding through the mouth or dressing it with hair bows. Using it as a nightlight. I mean that is what kids enjoy doing, therefore combine that with their enjoyment for Betta Fish and you have the perfect combination. I have a young nephew, who has the Teddy Tank and he is 8 years of age. He has it on his night table and even named the Teddy Bear, as well as the fish. It has lived in it for one year and there are no problems with the fish. As a fish owner for 17 years and I have two salt water fish tanks (175 gallons and 225 gallons) there is nothing wrong with this Tank. I think it's a cute idea and brings more attention to the fish.
Your second point that if things are cuddly then they should be cuddled. The Teddy Tank is cuddly and I agree that it should NOT be cuddled. However, I think if it were not plush than kids would not be able to relate to the object. Not everything is perfect. It also is a fish tank, therefore kids should stare at it.
This is just a regular one gallon bowl and a whole lot of engaging aspects for kids to interact. No interaction is meant for throwing, carrying, sleeping with the Teddy Tank. The interaction of Feeding through the mouth (will remind the kid to feed the fish). The interaction of dressing up the bear is to ornament their tank. The interaction of talking to the voice recorder and using it as a nightlight does not relate to picking up or sleeping with it.
I still have a problem with Teddytanks....I just truly believe that a teddy around a fish tank is not appropriate. It is not going to engage a child longer than a tank by itself (which with my girls was about a week! Yes they still revisit their interest...).
I am concerned because children see things than we do! If it looks cuddly, it should be cuddled!