Connection times, how much incentive do airlines have to be realistic?

As my answer has become rather long I have put the answers to your questions in bold.

US Citizens clear immigration into the US more quickly than non-US citizens, do the airlines consider citizenship when offering a connection?

No, there is no mechanism in the minimum connect file for this to happen. And indeed, it is possible to purchase a ticket without specifying the nationality of the traveller if you go through a ticket desk or a travel agent. It's also more nuanced than you claim. For instance Global Entry has been open to non-US citizens in various ways for several years; this route is often faster than a US citizen going through the manned desk.

If arriving internationally you clear immigration which takes you land-side, the then need to clear security again.

This varies by airport of course; for instance most international arrivals at Amsterdam do not need to re-clear security. Domestic and international flights can be treated separately though, as can flights to/from specified airports or to/from specified countries.

The delays at security vary markedly by time of day. Do airlines factor in such time-of-day delays?

The airline could try to account for time-of-day security delays by adjusting on the basis on individual flights (for instance, a connection from AA 123 to AA 543 could have a special rule overruling the default minimum connect time). However, this is not usually done because of the huge number of connections possible, and this would require extensive continuous maintenance of the file.

Flights vary markedly in their on-time arrival statistics. Does the airline consider the punctuality statistics when setting a connection time.

Yes, the airlines can and do do this.

My cynical thought is that an airline actually has little incentive to be concerned about a few folks missing connections:

You picked a nice flight with a good end-to-end schedule, you miss the connection, They already have your money, you have the stress and inconvenience. Planes are over-booked, a few folks missing connections actually helps the airline!

Tight connections are usually a cost for the airline. They may have to provide an express connections service [usually something the airport charges the airline] or in the case of commercially important passengers, even a personal escort or a car service to expedite the passenger's transfer. In the event that the passenger does miss a flight, this does not usually help the airline. The airline now has to re-book the passenger on another service (which might already be overbooked), potentially incurring hotel, food and transportation costs depending on the airline's commercial and legal context. If there is only one flight every few days, then a clued-up passenger may insist on being rebooked on a competing carrier, which can be very expensive for the forwarding airline. Alternatively, the airline may have to hold the onward flight, incurring the cost of scheduling problems later and delays to other passengers.*

My question is whether we know how carefully the airlines consider the feasibility of connection times?

It is extensively modelled and considered. As you say, it would be unwise to set the minimum connection time too high, because you will exclude some people from the connecting and prevent you from capturing their business. But there is a cost in being too optimistic, as I have set out above. And I have not covered the reputational damage that accrues from frequent delays and missed connections.

To give you an idea of the degree of flexibility that airlines have over minimum connect times, here is an excerpt of Tokyo-Narita's MCT (minimum connect time) file. The "standard" rules are given first, followed by exceptions.

STANDARD.D/D...D/I...I/D...I/I.
ONLINE    .20  1.00  1.00  1.00
OFFLINE   .20  1.00  1.00  1.00
** OR * ARE ALL
H1-H1 DD  4.00 FLT 5850 - 5999 - FLT 5850 - 5999 
H1-H1 DD  4.00 ALL  - FLT 5850 - 5999 
H1-H1 DD  4.00 FLT 5850 - 5999 - ALL  
AA-AA DD SUP   FLT 6100 - 9099 - FLT 6100 - 9099 TRM 2  - 2  
BA-BA DD SUP   FLT 4610 - 4649 - FLT 4610 - 4649 
GK-GK DD  1.30 
JL-JL DD   .20 TRM 2  - 2  
LH-LH DD SUP   TRM 1  - 1  
NH-NH DD   .20 TRM 1  - 1  
ZH-ZH DD  2.00 
**-H1 DD  4.00 ALL  - FLT 5850 - 5999 
**-ZH DD  2.00 
H1-** DD  4.00 FLT 5850 - 5999 - ALL  
9G-** DD  2.00 TRM 1  - 1  
9G-** DD  2.00 TRM 2  - 1  
9G-** DD  2.00 TRM 1  - 2  
9G-** DD  2.00 TRM 2  - 2  
**-** DD   .30 TRM 1  - 1  
**-** DD   .50 TRM 2  - 1  
**-** DD  1.20 TRM 3  - 1  
**-** DD   .50 TRM 1  - 2  
**-** DD   .30 TRM 2  - 2  
**-** DD  1.20 TRM 3  - 2  
**-** DD  1.20 TRM 1  - 3  
**-** DD  1.20 TRM 2  - 3  
**-** DD  1.00 TRM 3  - 3  
AA-AA DI SUP   FLT 8400 - 8499 - FLT 8400 - 8499 ALL - GUM 
  TRM 2  - 2  
AA-AA DI  1.00 FLT 8400 - 8439 - FLT 8400 - 8499 TRM 2  - 2  
  ALL - UNITED STATES  
AA-AA DI  1.00 FLT 8400 - 8499 - FLT    1 - 2754 TRM 2  - 2  
  ALL - UNITED STATES  
AA-AA DI  1.55 FLT 8440 - 8452 - FLT 8400 - 8499 TRM 2  - 2  
  ALL - UNITED STATES  
AA-AA DI  2.00 FLT 8453 - 8499 - FLT    1 - 2754 TRM 2  - 2  
  ALL - UNITED STATES  
AA-AA DI  1.00 FLT 8453 - 8499 - FLT 8400 - 8499 TRM 2  - 2  
  ALL - UNITED STATES  
AA-AA DI SUP   FLT 6100 - 8399 - FLT 6100 - 8499 TRM 2  - 2  
AA-AA DI SUP   FLT 8400 - 8499 - FLT 8500 - 9099 TRM 2  - 2  
AA-AA DI SUP   FLT 8500 - 9099 - FLT 6100 - 9099 TRM 2  - 2  
AA-AA DI  1.55 ALL  - FLT    1 - 2754 TRM 3  - 2  
AA-AA DI  1.55 ALL  - FLT 8400 - 8439 TRM 3  - 2  
AA-AA DI  1.55 ALL  - FLT 8453 - 8499 TRM 3  - 2  
AA-AA DI  1.50 FLT 8440 - 8452 - ALL  
AA-AA DI  1.00 TRM 2  - 2  
AA-AA DI  1.55 TRM 3  - 2  
AC-AC DI   .45 TRM 1  - 1  
AF-AF DI  1.50 TRM 2  - 2  
AF-AF DI  1.50 
AY-AY DI  1.00 TRM 2  - 2  
BA-BA DI SUP   FLT 4610 - 4649 - FLT 4610 - 4649 
BA-BA DI  1.00 ALL  - FLT 4601 - 4602 TRM 2  - 2  
BA-BA DI  1.00 FLT 3430 - 3449 - ALL  TRM 2  - 2  
BA-BA DI  1.00 FLT 4600 - 4649 - ALL  TRM 2  - 2  
CX-CX DI  1.40 FLT 6337 - FLT  505 CTS - HKG TRM 2  - 2  
CX-CX DI SUP   TRM 2  - 2  
DL-DL DI   .45 TRM 1  - 1  
GA-GA DI  1.35 FLT 9341 - FLT  881 
GA-GA DI  1.20 FLT 9345 - FLT  881 
H1-H1 DI  4.00 FLT 5850 - 5999 - FLT 5850 - 5999 
H1-H1 DI  4.00 ALL  - FLT 5850 - 5999 
H1-H1 DI  4.00 FLT 5850 - 5999 - ALL  
JL-JL DI   .55 FLT 3082 - FLT  413 
JL-JL DI  1.55 ALL  - FLT 5081 TRM 2  - 3  
JL-JL DI  1.55 ALL  - FLT 5085 TRM 2  - 3  
JL-JL DI  1.55 ALL  - FLT 5089 TRM 2  - 3  
JL-JL DI  1.40 FLT 6000 - 6999 - FLT 5080 - 5089 TRM 3  - 3  
  ALL - AUSTRALIA  
JL-JL DI  2.05 FLT 6000 - 6499 - FLT 5000 - 7999 TRM 3  - 1  
JL-JL DI  1.55 FLT 6000 - 6499 - FLT 5000 - 7999 TRM 3  - 2  
JL-JL DI  1.00 ALL  - FLT 6000 - 6999 ALL - HEL TRM 2  - 2  
JL-JL DI  1.00 ALL  - FLT 7000 - 7999 ALL - LHR TRM 2  - 2  
JL-JL DI  1.00 ALL  - FLT 7000 - 7999 TRM 2  - 2  
  ALL - UNITED STATES  
JL-JL DI  1.40 ALL  - FLT 5000 - 7999 TRM 2  - 2  
JL-JL DI  2.05 FLT 6000 - 6999 - ALL  TRM 3  - 1  
JL-JL DI  1.55 FLT 6000 - 6999 - ALL  TRM 3  - 2  
JL-JL DI  1.00 TRM 2  - 2  
LH-LH DI   .45 TRM 1  - 1  
LO-LO DI   .45 
LX-LX DI  1.00 TRM 1  - 1  
NH-NH DI  1.35 FLT 2152 - FLT 5471 CTS - DPS 
NH-NH DI   .45 ALL  - FLT    1 - 1930 TRM 1  - 1  
NH-NH DI  1.00 ALL  - FLT 5941 - 5999 TRM 1  - 1  
NH-NH DI   .45 ALL  - FLT 6000 - 6349 TRM 1  - 1  
NH-NH DI  1.30 ALL  - FLT 6350 - 6359 TRM 1  - 1  
NH-NH DI   .45 ALL  - FLT 6630 - 6649 TRM 1  - 1  
NH-NH DI   .45 ALL  - FLT 6751 - 6850 TRM 1  - 1  
NH-NH DI   .45 ALL  - FLT 6887 - 6900 TRM 1  - 1  
NH-NH DI   .45 ALL  - FLT 6931 - 6999 TRM 1  - 1  
NH-NH DI  1.00 ALL  - FLT 7000 - 7813 TRM 1  - 1  
NH-NH DI   .45 ALL  - FLT 7950 - 7989 TRM 1  - 1  
NH-NH DI  1.00 ALL  - FLT 5650 - 5700 
NH-NH DI  1.00 ALL  - FLT 6450 - 6549 
NZ-NZ DI   .45 TRM 1  - 1  
OS-OS DI   .45 FLT 8551 - 8580 - ALL  TRM 1  - 1  
OS-OS DI  1.00 TRM 1  - 1  
PK-PK DI  2.00 
QF-QF DI  1.50 FLT 4100 - 4199 - ALL  
SQ-SQ DI   .45 TRM 1  - 1  
S7-S7 DI  1.00 FLT 4822 - 4833 - FLT 4122 TRM 2  - 2  
TG-TG DI  1.00 TRM 1  - 1  
TK-TK DI   .45 FLT 8830 - 8864 - ALL  TRM 1  - 1  
UA-UA DI  1.00 TRM 1  - 1  
UA-UA DI  1.30 TRM 2  - 1  
UA-UA DI  1.20 TRM 2  - 2  
ZH-ZH DI  1.30 
7C-7C DI  3.20 
AA-JL DI  1.00 ALL  - FLT 5000 - 7999 TRM 2  - 2  
  ALL - UNITED STATES  
AA-JL DI  1.40 ALL  - FLT 5000 - 7999 TRM 2  - 2  
AA-JL DI  1.00 TRM 2  - 2  
AA-JQ DI  1.40 TRM 2  - 3  
AA-S7 DI  1.00 ALL  - FLT 4122 TRM 2  - 2  
AC-NH DI   .45 ALL  - FLT    1 - 1930 TRM 1  - 1  
AF-JL DI  1.00 
AF-S7 DI  1.00 ALL  - FLT 4122 TRM 2  - 2  
BA-JL DI  1.30 TRM 2  - 2  
BA-S7 DI  1.30 ALL  - FLT 4122 TRM 2  - 2  
GK-AA DI  1.55 ALL  - FLT    1 - 2754 TRM 3  - 2  
GK-AA DI  1.55 ALL  - FLT 8400 - 8439 TRM 3  - 2  
GK-AA DI  1.55 ALL  - FLT 8453 - 8499 TRM 3  - 2  
GK-AC DI  1.50 TRM 3  - 1  
GK-JL DI  2.05 TRM 3  - 1  
GK-JL DI  1.55 TRM 3  - 2  
GK-JQ DI  1.40 
GK-QF DI  1.40 ALL  - FLT  200 -  299 
GK-S7 DI  1.55 ALL  - FLT 4122 TRM 3  - 2  
JL-AA DI  1.55 FLT 6000 - 6999 - ALL  TRM 3  - 2  
JL-AA DI  1.00 TRM 2  - 2  
JL-AC DI  1.30 TRM 2  - 1  
JL-AF DI  1.00 TRM 2  - 2  
JL-AY DI   .55 FLT 3082 - FLT 5812 NGO - HEL TRM 2  - 2  
JL-AY DI  1.00 TRM 2  - 2  
JL-BA DI  1.00 TRM 2  - 2  
JL-CZ DI  2.30 
JL-QF DI  2.00 ALL  - FLT  200 -  299 TRM 1  - 2  
JL-QF DI  2.00 ALL  - FLT  200 -  299 TRM 2  - 2  
JL-S7 DI  1.00 ALL  - FLT 4122 TRM 2  - 2  
LH-NH DI   .45 ALL  - FLT    1 - 1930 TRM 1  - 1  
LH-NH DI   .45 ALL  - FLT 5001 - 6359 
LH-NH DI   .45 ALL  - FLT 6380 - 7813 
LH-OS DI  1.00 TRM 1  - 1  
LH-SQ DI  1.00 TRM 1  - 1  
LO-OS DI  1.00 TRM 1  - 1  
LO-SQ DI  1.00 TRM 1  - 1  
LX-NH DI   .45 ALL  - FLT    1 - 1930 TRM 1  - 1  
LX-NH DI   .45 ALL  - FLT 5001 - 6359 
LX-NH DI   .45 ALL  - FLT 6380 - 7813 
LX-OS DI  1.00 TRM 1  - 1  
LX-SQ DI  1.00 TRM 1  - 1  
NH-AC DI   .45 TRM 1  - 1  
NH-CA DI   .45 ALL  - FLT 6651 - 6800 
NH-GA DI  1.20 FLT 2142 - FLT  881 
NH-GA DI  1.35 FLT 2152 - FLT  881 
NH-LH DI   .45 TRM 1  - 1  
NH-LO DI   .45 TRM 1  - 1  
NH-LX DI   .45 TRM 1  - 1  
NH-NZ DI   .45 TRM 1  - 1  
NH-OS DI   .45 TRM 1  - 1  
NH-OZ DI   .45 TRM 1  - 1  
NH-SK DI   .45 TRM 1  - 1  
NH-SQ DI   .45 TRM 1  - 1  
NH-TG DI  1.00 TRM 1  - 1  
NH-TK DI   .45 TRM 1  - 1  
NH-UA DI  1.00 ALL  - FLT 7899 - 8014 
NH-UA DI  1.00 TRM 1  - 1  
OS-LH DI  1.00 TRM 1  - 1  
OS-LX DI  1.00 TRM 1  - 1  
OS-NH DI   .45 ALL  - FLT    1 - 1930 TRM 1  - 1  
OS-NH DI   .45 ALL  - FLT 5001 - 7813 TRM 1  - 1  
OS-SK DI  1.00 TRM 1  - 1  
OS-SQ DI  1.00 TRM 1  - 1  
OZ-NH DI   .45 ALL  - FLT    1 - 1930 TRM 1  - 1  
OZ-NH DI   .45 ALL  - FLT 5001 - 7813 TRM 1  - 1  
OZ-OS DI  1.00 TRM 1  - 1  
OZ-SQ DI  1.00 TRM 1  - 1  
SK-OS DI  1.00 TRM 1  - 1  
SK-SQ DI  1.00 TRM 1  - 1  
SQ-LH DI  1.00 TRM 1  - 1  
SQ-LX DI  1.00 TRM 1  - 1  
SQ-OS DI  1.00 TRM 1  - 1  
SQ-SK DI  1.00 TRM 1  - 1  
SQ-UA DI   .45 TRM 1  - 1  
TG-NH DI  1.00 ALL  - FLT    1 - 5000 TRM 1  - 1  
TG-NH DI   .45 ALL  - FLT 5951 - 6359 
TG-OS DI  1.00 TRM 1  - 1  
TG-SQ DI  1.00 TRM 1  - 1  
TP-OS DI  1.00 TRM 1  - 1  
TP-SQ DI  1.00 TRM 1  - 1  
UA-NH DI  1.00 TRM 1  - 1  
UA-OS DI  1.00 TRM 1  - 1  
UA-SQ DI  1.00 TRM 1  - 1  
UO-PK DI  3.00 TRM 1  - 1  
UO-PK DI  3.00 TRM 2  - 2  
UO-VN DI  3.00 TRM 1  - 1  
UO-VN DI  3.00 TRM 2  - 2  
**-AA DI SUP   ALL  - FLT 6100 - 9099 SPN - ALL TRM 1  - 2  
  ALL - UNITED STATES  
**-AA DI SUP   ALL  - FLT 6100 - 9099 SPN - ALL TRM 2  - 2  
  ALL - UNITED STATES  
**-AA DI  2.00 TRM 3  - 2  
**-DL DI  1.30 TRM 1  - 1  
**-DL DI  1.50 TRM 3  - 1  
**-GA DI  1.50 TRM 2  - 1  
**-GA DI  1.40 TRM 2  - 2  
**-HU DI  1.50 TRM 1  - 2  
**-HU DI  1.40 TRM 2  - 2  
**-HU DI  1.55 TRM 3  - 2  
**-HX DI  2.00 
**-H1 DI  4.00 ALL  - FLT 5850 - 5999 
**-JL DI  1.40 ALL  - FLT 5000 - 7999 TRM 2  - 2  
**-JL DI  1.40 TRM 2  - 2  
**-JQ DI  2.30 TRM 1  - 3  
**-JQ DI  2.00 TRM 2  - 3  
**-KE DI  2.05 TRM 2  - 1  
**-MU DI  1.50 TRM 1  - 2  

D is short for domestic and I is short for international, FLT means flight number, TRM is short for terminal, and SUP means the connection is suppressed (never allowed). * and ** are wildcards. (SUP rules are generally used to disallow certain routes or certain codeshare combinations for legal and commercial reasons, rather than to manage the feasibility and practicality of connecting.)

Read from the top and stop when you find a rule that matches.

For instance, JL-QF DI 2.00 ALL - FLT 200 - 299 TRM 1 - 2 means, this rule applies when transferring from JAL (JL) to Qantas (QF), and from a domestic to an international flight (DI), and transferring from any JL flight to a Qantas flight in the range 200-299 (ALL - FLT 200 - 299), and from terminal 1 to terminal 2 (TRM 1 - 2): the MCT is two hours. (2.00).

Note that the rule is based on the marketing carrier, not the operating carrier; i.e., each rule has to be duplicated for every codeshare.

What this example does not cover is that that certain rules may have a time limit, i.e., certain rules apply between specific dates only.

At major airports these files usually run to thousands of individual rules.

* For instance, last weekend I was in a party of twenty passengers transferring from a delayed A350 to a 60-seater ATR. Alternative onward flights were sold out for the next few days, and in any case our return journey was the next day. The airline had little choice but to hold our onward flight or incur significant logistical and compensation costs.