It's possible that they might be able to mass produce something like this in the $800-$1k range, given that the base MacBook Air starts at $1800. And this would have a lot more in common, hardware-wise, with the Air than with the Touch.
To get sufficient buyers, I think they'd have to get it down at least to the $500-$600 range, or maybe even lower. And I don't think that will be feasible, especially given how people would expect to use it. The screen area is 4x, which multiplies requirements for memory and processor and network throughput and batteries... which all still has to fit in a sexy form factor.
Still, it would be sweet. :)