Given that there are only Kojaks available in that size (and off the beaten track the Strozapretis and the Bridgestone tire) this would have been a miserable choice, at least from today's perspective.
What one should have in mind is what the constraints and targets were when the Brompton was designed. A lot of the design decisions followed the goal to fit in the train compartments of the time when the Brompton was designed. This led i.e. to the original smallish roller wheels of the MK2. Possibly the tire size was part of that, too (and Brompton had to use what existed in opposite to today where the shear amount of Bromptons produced and around opens a market for itself, so they are less dependent from existing things but often can define things).
Today the world has changed as have the train compartments (and technical possibilities as well as the financial situation of the company) and thus there's more freedom today for the design than it was back then.
Yes, the 17" wheel has been slowly rotating towards obsolescence for decades. In the mid 2000s, I thought of upgrading my Birdy with 17" wheels, but the limitations of tyre and rim choice put me off then.
I'm not sure if 369 wheels were experimented with by Andrew Ritchie back in the day, but I imagine they were at least, considered. I'm sure you're right that engineering and compactness of fold were key considerations as was the relatively narrow size of most 369 tyres: approx 32mm. Dunlop was the main tyre manufacturer in this size, pre-2000, as I recall.
When I was getting my Kinetics stretch conversion, what I really wanted was 17" wheels and 40mm tyres....Dreams, eh?