That's essentially what the LG UltraFine is, and that ended up at $1,300 for a plastic housing - I think many underestimate the cost of CNC-milled aluminum enclosures (look at AirPods Max vs Bose/Sony).
It sounds like people want a modern panel, Al enclosure, speakers, webcam, mic, and IO. That's essentially an iMac with a logic board that has a cheaper chip, no RAM/storage/WiFi/BT, and no included keyboard/mouse.
I imagine the savings are there, but less than one might expect. Add in the fact that the enclosure/logic board will be unique to the monitor and at a lower volume than the iMac, and the cost likely jumps to a point where the perceived value vs just buying an iMac is uncompetitive.
This is where second-party products like the UltraFine come in - to make it competitive, cost has to be cut: the enclosure becomes plastic, speakers/mic become "good enough" rather than class-leading, and build quality drops (look at the inside of an ultrafine vs an iMac, making the internals pretty costs money). So the product that costs an amount people are willing to spend no longer meets the bar for a product Apple is willing to put their name on, and they work with a partner like LG to produce it.
So today the question is whether the state of technology/manufacturing/demand has changed, it looks like Apple saw a market for the ProDisplay, but we'll have to wait and see if consumer demand today makes space for a general productivity monitor.
Honestly, if it were possible to revive Target Display mode in today's iMacs, and perhaps utilize the internals to add functionality like wireless SideCar, graphics/processing acceleration, and full IO/webcam; an iMac might be a compelling "accessory" for a MacBook Air - but I don't think Apple would want to market such a use case and muddy their product line.