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I actually never understood this, the C128 was a strange device (as you say like the IIGS). Was it really because Albert Charpentier left and then nobody was able to do a VicIII until much later (C65)?

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Making a VIC III didn’t have to be magic. All it’d need would be a doubled clock and faster memory to keep up with a 2MHz or more 6502. Doubling the clock and memory speed would allow for an 80 column mode and higher resolution without requiring a separate VDP. Also, a couple separate palettes and a palette selector per character line wouldn’t be hard to implement.

At the very least, the two video chips could support overlaying on composite and analog RGB output (because nice colours). The way it ended up was just silly.

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