As I understand ERC721 contracts, in particular Cryptokitties, a cryptokitty is not associated with a piece of ETH but rather is just some storage associated with the Cryptokitty smart contract. Is this correct? That is to say, while a cryptokitty is a token on the Ethereum blockchain, it is not a token in the sense that ETH is a token/coin?
An ERC721 compliant smart contract has an array (or ledger) of who owns which tokens and what the properties of the tokens are. It also implements some standard functions that make it easy for people to predict how they will work. You can think of it as a homemade token, maybe.
You can think of Ether as the systemwide (ie not homemade) token.
a cryptokitty is not associated with a piece of ETH
Specific "pieces of ETH" can't be associated with things. They are nonfungible, which basically means they don't have unique IDs.
Not the greatest explanation, but hopefully it helps a bit. I would continue reading up and watching videos on general Ethereum concepts.