Techno is both music from the perspective of artistic merit and also from the perspective of the 'go to the club and get completely hammered, then jump up and down and/or gyrate wildly for three hours' perspective.
Artistically, music could be considered any group of sounds intentionally arranged to evoke a feeling or image. In some cases, even a complete lack of sound is considered musical. Techno definitely fits that definition; that it was produced electronically and was not necessarily performed in real time doesn't negate it's musicality.
Truth be told, I too have trouble wrapping my head around techno as an art form for the same reason as you do; I find it a bit odd that I should spend hours and hours practicing and drilling and refining my technique and then some guy from Seattle buys a copy of Pro Tools and is somehow suddenly on equal footing with me as a musician. I have little patience for techno as a style because I think it's boring and that most of the songs are derivative and formulaic, so that doesn't help it either. At the end of the day, though, I have to at least grudgingly concede that techno is a form of art, even if it does seem rather crude from where I'm sitting. The other side of the argument is that as a blues musician I may be able to draw more emotion into my music, but the previously mentioned 'dancing' doesn't really go with it very well.
Also, I think calling live musicians obsolete is a bit hyperbolic. I have yet to meet a synthesizer that can emote as well as I can, nor one that can improvise. Live musicians aren't in any danger of being superceded because there is no machine currently capable of replicating all of the subtle nuances that a live performance brings. If that weren't the case I imagine we'd all be using 606's and all of the drummers of the world would be out of work by now, sitting on the sidewalk with 'will hit stuff for food' signs.