That's unfair. The poor woman never said Obama II was born in Kenya. She answered "yes" when asked, through a translator, whether she was "present" when Obama was born, but it's clear from the rest of the interview she misunderstood the question. She thought the interviewer was asking her whether she was in Kenya while Obama was born in Hawaii. It's all there in the transcript.
I have to agree with you. The statements by the Grandmother are really terrible evidence. Without having them nailed down better than that I would be ashamed to bring them up. That being said, I am certain that Obama has told people in the past that he was from Kenya, and I believe this is because he wanted to create an exotic allure when he was a nobody trying to become a somebody, so he just made that up.