Anthony, I think it's important to consider that not long ago, Lionel meant toy trains, and toy trains only. Some of them were near scale in proportion, only with simplified detailing and therefore more durable. With the advent of TMCC in 1995, Lionel has also come to mean other things, such as realistically scale proportioned and detailed trains. Reading the train forums might lead you to the impression that Lionel is only scale, but the "traditional" Lionel trains are still made and still the bulk of the hobby.
What always was the appeal of Lionel was the play value: Operating cars and accessories that were not available in HO (though TYCO and Lionel HO did replicate some of them). The "puffing" smoke units, while not on the same par as today's fan-driven smoke units, were the height of realism at one point in time. Same for the air-driven whistle in Lionel steam engines. To anyone who was a kid in the 1950's, those toy trains looked as real as the real trains. It was called "imagination," something we've pushed kids away from over the years.
From what you've said Anthony, you're talking about starter level trains. In that case, both HO and Lionel starter sets have improved dramatically over the years. I'm impressed with the lower cost HO starter sets I've had the chance to operate. And Lionel's current FasTrack was inspired by the Bachmann HO scale E-Z track, which makes setting up a HO floor layout easier than ever. And they are definitely lower in cost than starter Lionel products. The product availability and variety are also greater in HO because it is a much larger market. And as with any hobby, there are different levels of features and cost.
But that said, the size and durability factor gives O gauge an edge for children along with the play factor. Kids are not focused on accurate realism the way adults are... they want to play and have fun. Ask anyone: The typical kid question when seeing toy trains is "how fast will they go?"
And by using 027 track (which no longer comes in Lionel starter sets, though you can still find older stock sets with 027 track), you can build a fun layout on a 30-36 inch wide hollow core door. You could do that with the 31 inch diameter Lionel FasTrack, but you'd have to spend the extra money to buy it since Lionel starter sets only come with the 36 inch diameter FasTrack.
And I want to address the common thought "you get what you pay for." I'm a long time buyer of Lionel (and other companies) starter products... that are made in China along with all the other trains. In over 25 years, I have NEVER once had a DOA of any kind... trains often ignorantly referred to as "junk" by some people. I'm still running the original starter trains I first bought which are low cost Lionel and K-Line trains. You do get more features, functions and scale fidelity by paying more. But you don't necessarily get reliability and durability.
You don't read this much, but the BIGGEST factor working against the train hobby is the disintegration of the family. This has always been a father-son hobby and Lionel used that effectively for decades in their advertising. Not that mom's couldn't do it - we have some female modelers on this forum. In years gone by, the train layout was the kid's - and dad got to play with it too. Today, it's usually dad's layout and he lets his son play with it with supervision.
By government statistics, half this nation's children are being raised in a home with no father in the house. Single parents tend to be more financially strapped, and definitely more time restricted. So they tend to buy toys that involve no parental participation, such as video games. So this is a tough sell.
Yet trains are still are great hobby. And I've personally seen this happen: You tell a reluctant kid who would rather have a video game, that you want to get him a train set. But then tell him, you're going to be involved: You're going to design and help build the layout and I'll teach you how to use power tools - and watch their attitude do a complete change.
As a final thought, here's a great website with lots and lots of information about trains, the hobby and building all sorts of layouts with all the various track types:
http://www.thortrains.net/
Good luck with your presentation!