I get the appeal and have even been bitten by the tiny bike bug myself. I have a MadAss 125 in the garage and love booting around on it. Yes its slow, no it won't go on the highway, but its still more fun per dollar than any other bike I've owned. I live up in Peterborough and bombing down the back roads on the MadAss is a little dicey as it maxes out at 90km/h so cruising at 80km/h the bike is working pretty hard. The Grom has a little more top end and wouldn't be working as hard at 80km/h. I like the little Kawi and don't mind a little competition for the Grom, even if it is a copy. The Groms are selling like hot cakes and getting your hands on a new one often means paying full MSRP. I don't blame Kawi one bit for trying to take a slice of that pie for themselves.
With a Wife, Kid, job, long commute etc I don't have much time for riding anymore. I found this summer I hopped on my 125 more than my 600 just because it is so easy to wheel out of the garage and I don't feel like I got ripped off when I only get to ride for 1hr. I can bomb around town, turn on a dime, do BMX style skid stops, swing down places my 600 won't fit etc and have a blast on it. Even exploring the back roads and concessions etc up here its lots of fun. If I lived in TO I would definitely want one. Perfect place for a Grom or Z125, just so long as you don't want to use one to escape the city along the 401!