Apple operates on data that none of us have access to. They make decisions based on market research, ROI, profit margin, deeply analyzed sales data, etc. What I see is a lot of people using personal emotion to justify why Apple should offer a certain product like the SE and that is not how businesses are run. Spending a lot of money to redesign a small screened phone that the market expects to be budget priced isn't a formula for making big profits.
Apple offers the iPhone 7 as their budget model right now. I think it's quite likely it will see a price drop within the next 6 months and match the old SE at $349 or possibly a little higher at $399. The return on selling the 7 at that price is likely better then trying to redesign the SE and getting a return on it. If there was a market for an expensive premium small screened phone, Apple would have one. There isn't.