yes, i give you that, taken literally it can't make sense that easily ;)
The purpose of technology is not to be in our way, but to achieve goals. In that respect, the best technology or technique is one which achieves the goal with little or no action at all.
In that respect, reducing the UI, up to the point where it is pure interaction, invisible, unobtrusive, is the goal especially interaction designers share, as far as my opinion goes.
While I agree with most of what you say above, your understanding of interaction design is somewhat simplified, it not just about streamlining the user interface it's also about minimizing physical and mental strain of interaction. It's about finding the right balance. It's the latter two, that most people tend to ignore.
The whole purpose of designing interaction is to work around the fact that it is still necessary. At the end of the day, we want to write a text without thinking about windows, icons, menus or pointers, we want to achieve the simplicity we have when e.g. using pencil and paper. The fact that we are yet to balance the flexibility of computer interfaces with the perfect simplicity of virtually modeled physical appliances reflects, that it is not so easy to simply phase out UIs entirely, they will be around as long as options exist in interaction.
How can one use a computer, or any other form of technology for that matter, without interaction? The purpose of interaction design is to make interaction a positive experience for the user, not to remove the interaction altogether. Your pencil and paper analogy is also flawed. Wouldn't going back to the simplicity of pen and paper be negating all the benefits we get with computer aided writing. People moved beyond pen and paper for a reason. And using pen and paper is anything but simple, it takes lots time to master if you wish to produce anything of value (modern art excluded).
How to design an interface otoh is to aim at not needing it at the end of the day.
If you wish to expose any amount of functionality you need an interface. Generally speaking more functionality you have, more complex you interface will be, simple as.