Farthest Galaxy Discovered is 13.4 Billion Light Years Away

OK, here's my effort at explaining the conundrum I have been mulling over.

For this, let us first read two articles:

http://www.space.com/18502-farthest-galaxy-discovery-hubble-photos.html

and

http://scienceline.org/2007/07/ask-romero-speedoflight/

A few thoughts strung together to explain my predicament/ conundrum:

The universe exploded into being 13.7 billion years ago.

400 million yrs later, the entire  universe must have been a far smaller place than it is now - since it has been expanding exponentially since. 

Let me call that point 'K', which was 400 million years after the Big Bang.

The farthest galaxy recently discovered - they call it  MAC0647JD -  was a mere 600 light years wide. It was a dwarf galaxy back then. So let's from this moment call it mini MAC. 

It is expected that since then it may have combined with other galaxies or expanded or whatever to form a larger whole (just as our Milky Way in its journey from ancient history may have done).

Taking the raisin example of the loaf of bread (in the other link I sent), it means our Milky Way galaxy ancestor (in whatever form it was) was pretty close in space to mini-MAC 400 million years after the Big Bang.

In other words, the light of miniMAC reached our ancestral galaxy taking a period of time, as per the distance between them (so - if they were 400 million light years apart, the light of miniMAC reached our ancestral galaxy in another 400 million years - point here is that  the light was as the mini-MAC looked at point K.

What I cannot understand is how can we (same ancestral galaxy now morphed after another 12 plus billion years later) continue to see the same K. It technically means that if there was an eye in our ancestor (billions of years ago), it would have seen the same mini MAC as it was in point K, and the Milky Way now sees the very same K.

 It means that as the Milky Way ancestor has journeyed through the universe, we have continued to see miniMAC the same as in period K over billions of years. Which is ridiculous.

It also means that for all you know, we are also watching miniMAC as it has become a few billion years later, elsewhere in the sky - ALL AT THE SAME TIME!

I was trawling the net trying to resolve this conundrum, when I came upon this Khan Academy site 

https://www.khanacademy.org/science/cosmology-and-astronomy/universe-scale-topic/big-bang-expansion-topic/v/a-universe-smaller-than-the-observable

- where there is a reply that resonates with the same thought, and I copy it here: 

This is the whole magic of this theory. It is possible (in theory), that an insignificant distant newborn star, some 4.5 billion light years away, is actually our own Sun as it was 4.5 billion years ago when it came to be. We just would not be able to recognize it, because it and everything around it would look different at that area of spacetime.

Then of course the spin off ideas are truly fascinating - for it means there are actually far fewer galaxies in the sky than we think there are. Many are avatars of each other.

This in a nutshell is my conundrum. Illumination, anyone out there??