It depends on what you will use it for. The iPad will not replace the Mac, unless you do only really basic stuff. What you use it for?
I would perhaps keep the Mac and use the gift card for the iPad only and buy the 10.5" iPad Pro. I simply don't think it is worth to exchange a Mac and an iPad Mini for a brand new iPad Pro.
The OP did describe usage. He's already doing all his photography with iOS. He mentioned he has a bunch of MS documents. If his document editing needs are within the mainstream, he may find that he can do it all on iOS, with the possible addition of a Smart or Bluetooth keyboard.
Here's the way I read things: "I'm happy with using iOS, it already suits my needs, what I really want to do is upgrade my iOS capabilities." So, maybe you feel what the OP is doing is "basic stuff," or maybe you just don't know what can be accomplished today in iOS, if one takes the risk to throw away the crutch (MBP).
I think the OP's plan has merit. He wants to upgrade his iPad (bigger and much better screen, Pencil, and, though he didn't mention it, a better camera than the SE's). He has an MBP he barely uses. So why not turn that into cash, and get something that better meets his needs? Keeping something worth $466, "Just in case," isn't necessarily a good use of resources (if that's what it's worth to Best Buy, what might it fetch in a private sale?). He still has an older Mac, if he needs it. If he realizes later, "Gee, I could still use a reasonably up-to-date Mac," a used iMac or MBA may just fit the bill.
As I've said often, I stopped carrying a laptop by the middle of 2010, a few months after I got a first-gen iPad. I haven't stopped needing a desktop Mac, but for mobile needs (which includes professional travel writing and photography, uploaded for immediate publication), iPad has been all I need. Are there occasional, "If only I had a laptop" moments? Sure, but they're rare - not enough to justify carrying the extra weight and bulk of a laptop wherever I go. Those few, "If only's" have been addressed by iOS 11 (can't wait to load it onto my 12.9" iPP).
So no, I don't think the OP is foolish. I think this is a very reasonable choice, based on his description. It carries a bit of risk, but not very much, and it's hardly a "there's no going back" decision.