First of all, I'd just like to agree with everyone who has thus far expressed the sentiment that Ax was probably not making a joke. Not that early in the series, anyway. Later on, when he had developed something akin to human humor? Maybe.
Secondly, I'd like to make an analogy here. When humans first discovered oil, it never occurred to anybody in their wildest dreams that they could power machinery with it. The first uses of oil, for several thousand years after its discovery, consisted of dunking sticks in it and setting them on fire, and putting it in pots and setting them on fire and launching them at enemies. Nowadays, of course, oil is everywhere you can think of doing pretty much everything you can think of (okay, so there's loads of things we use electricity for, but stick a gas-powered generator on it and you can substitute oil for electricity pretty easily).
Compared to Andalites, we are at the equivalent to the "sticks and pots" phase of nuclear fusion. We don't have the technology to really make full use of it, so of course we can't really envision using it for anything. Who's to say that it wouldn't be a perfectly feasible and cheap way to power toys for a more advanced civilization? We can't really imagine technology that we don't have. We can try, and in cases where the science is there we can come pretty close. But that shouldn't stop us from thinking that anything is possible.
