I see what you mean, but the idea is that the discount for the through
journey will make Prepay cheaper for a simple return journey. For
example, for someone in Battersea who feeds into Vauxhall by bus for a
journey to King's Cross, the current prepay fare is £0.80 + £1.70 each
way (£5.00 return, making the off-peak travelcard cheaper at £4.70).
However, imagine the bus fare is only £0.40 for journeys connecting
to/from a Tube leg - £2.10 each way, making the return journey £4.20.

It lessens the £1.30 "penalty" for not living near a Tube station to
£0.40.

I think you mean to £0.80 but that doesn't change the point of course. I
see the idea now. Not sure I can totally sympathize with the view of this
being a "penalty" for not living near a tube station though and I am a
decent bus ride away from the nearest one myself.

I guess if national rail stations were brought into the TfL zonal pricing
for singles and returns it would also weaken the argument somewhat.