Personally, I don't--and never did--think that the rampant kleptomania, the dogged refusal to understand the concept of property, or the implausible lack of fear were really the fundamental issue with the Kender race. It's entirely possible to have any or even all of those things in a race that still "makes sense" in some fashion. Consider Rowling's goblins and their concept of "property," which is profoundly Marxist: an object is eternally owned by its creator. If it is commissioned by someone else, then they are given right to it, perhaps even for their entire lives, but a "sale" is never "in perpetuity." Creation--labor--is a sacred bond between the worker and the work, and refusing to return a work to its creator when the..."leasing" party dies, is theft. This is a profoundly different idea of property than that of humans, or indeed any other (mentioned) species, in the Harry Potter universe--but it is not an incomprehensible one.
But none of this is to say that Kender don't have a fundamental flaw. They absolutely do. And this fundamental flaw is mixed into their very core, it is clay mingled into the iron. The oft-cited, and somewhat expletive-heavy, image regarding the Kender makes this very clear:
Kender are canonically innocent. They are canonically incapable of actually 'being thieves,' or doing anything genuinely evil. They're "almost completely incorruptible," they are "the innocents of the world," they supposedly "hate thieves" (how can you hate thievery if you don't understand property?) but will confabulate or even outright lie when their "borrowings" are discovered, etc.
*That* is the thing that breaks the race. *That* is the thing which pigeonholes them into an archetype so narrow, I'm not sure a player can remain completely faithful to it while playing an interesting, dynamic character. *That* is what makes all the rest of it dangerous and problematic. If, instead, they were adrenaline-junkies and incorrigible secret-finders ("every lock needs to be opened, every chest hides something interesting," from their opening blurb), who freely admitted that their behavior was sometimes uncouth but didn't care because caring about that is boring, they would be dramatically more interesting to play--and the potential dangers of their archetype would be much more obvious.