But they did release the CBM 256, with an optional 8088 or Z80 daughterboard: http://www.zimmers.net/cbmpics/cb3s.html
Oh, to be a fly on the wall at all of those meetings of computer manufacturers where they asked the engineers "why can't we run PC software too?"
During CP/M operation, some BIOS functionality actually causes a context switch from the Z-80 to the 8502 and back...
It really is. It's a fantastic looking machine but the internals are just bonkers.
The reason for the internal Z80 was that Commodore had sold all these CP/M plugin cartridges that actually had a Z80 in them, but they drew too much power and the C128 engineers pretty much unilaterally decided it was cheaper to just build in the second chip than sort out the power issue [0].
The story of how this machine was designed and built is quite hair-raising and the likes of which I doubt we'll ever see again!
[0] https://www.reddit.com/r/c128/comments/682da4/c128_ama_from_...
I have to disagree with "thank goodness". David's source is undoubtedly Brian Bagnall's "Amiga Years" follow-up to his Commodore book. He leaves out many tantalizing details. The C256, codenamed BMW, was being designed by Dave Haynie with Dave DiOrio on the team. These are really brilliant guys and they were putting together a beautiful machine that was never intended to replace the C64, mind you. It was another product family altogether.