Why would you need a mile in an urban environment? Trace out a circle with that radius in Google Earth; it's an absurd range.
The idea is that you have a pretty high density of users. 100 meters would be more than enough to cross any street and reach several buildings away in any direction. Even in an American suburb, it'd reach a few houses away. That's a realistic goal: 100 meters, not 1600.
Because none of my neighbours will have the hardware. And if they don't have it, I'm not getting it because it's a waste of my time.
If you expand the number of neighbours to all of those that are within a mile of me, you increase the likelyhood of finding somebody by a large amount. I would buy kit just because I'd be interested in finding these people.
The idea is that you have a pretty high density of users. 100 meters would be more than enough to cross any street and reach several buildings away in any direction. Even in an American suburb, it'd reach a few houses away. That's a realistic goal: 100 meters, not 1600.