This may be an "odd" comparison to make, but it seems to fit to me... I am an artist (well, I teach art atm, but I also paint and draw in my non-existant free time) and, while art could be considered a "hobby", unless one is a professional artist (i.e. starving and trying to live off your work). Most people do not have a problem with an artist making a "profit" from selling a painting, etc. To me, breeding is the same way...
From my view point, both artists and breeders are in those fields to do what they have a passion for... In that sense, you would still want to paint/sculpt/etc. or breed/show even if there was no chance of making any money from it, just because that is what you love to do.
However, if I sell a painting and cover more than my physical expenses (materials cost) that is acceptable, because of the artwork's originality and considerable time/effort put into the piece....Not to mention the fact that I went to college for 4 years for my BFA, so I have that overhead and expertise that should come into play in terms of my "cost" and what the buyer should pay... Can you imagine going into a gallery and offering to pay $100 for a painting because you knew that the cost of the canvas + brushes and paint was that much? No, you expect to pay over the materials cost to cover the "soft" expenses, as someone else said... A painting usually takes at least 20-30 hours (oil / water-based oil), so in addition to materials, you are paying for the artist's time...and, if at a reasonable "hourly" rate...that would be at least $300-$600 for the time, then the $100 for the materials, and of course the gallery mark up
With breeding, although a degree isn't required, I would imagine that you still spend many hours researching genetics, going to shows, finding good breeding stock, not to mention caring for your cats... You also have the overhead of show expenses, etc... which are not directly related to the literal raising of the kittens... So, IMO, if you do charge enough per kitten that you do better than "break even", that should be more than acceptable....
Per my "painting" scenerio above, you could see that a breeder's time + supplies + medical expenses + overhead cost would be quite high, so when looking at the "profit" you must also consider what the final kitten cost - overhead leaves the breeder, then devide that by the hundreds of hours they have spent caring for that litter...Leaves very little when seen in terms of "hourly" pay.
One more point and I'll stop typing in this long-winded post
Whatever "profit" a breeder makes will actually, in the long run, go back into their kitten's care... Future litters, new breeding stock, advertising, etc. So, instead of thinking of it as "profit", think of it as $$ to help continue/support/improve their cattery.