Is there a port to the 6502, or did they run a computer in a cartridge to do that?
CP/M Plus on the 128 was much more useful because the 1571 could read MFM disks, though it was hobbled by its architecture and ran slower than it should have.
This by itself is no great obstacle; even aside from the nonstandardization of CP/M 5.25" disk formats, CP/M on Apple II has the same GCR/MFM issue but the SoftCard and its many clones were among the most popular accessories, and consequently no shortage of software available on the Apple II disk format.
No, the issue with the C64 CP/M cartridge is that it sucked, like almost everything else Commodore designed. Even assuming that someone in 1985 or 1986 wanted to run Turbo Pascal or WordStar on the 128 as opposed to buying an inexpensive PC clone or a used Kaypro or Osborne, the 128 implementation is so slow that it is more or less unusable for regular use.