I suspect IF the rumor is true and they are targeting such a low price point then its not for the US market, but for emerging markets and other ones like China. Apple is not looking to cut their profits but they want to gain market share where needed and where price is a sensitive issue like India.
That said, I can't see poly-carbonate being the sole material that is going to reduce the price down, I mean a larger display costs more, they must be cutting the flash memory, not the current gen processor and a few other things.
Thanks I will take the higher end model over the cheap dodge neon.