I don't think people are factoring in the things it won't have like an iphone as well, so there is trade-off on costs.
I have a nice 10" asus notebook I bought for under $300.00.
So thinking a device like this that emulates a lot of already developed iphone functionality and adds content delivery would be ~$499.00 is not unreasonable. This will not have a lot of hardware that is in an iphone.
You can't do that. Apple prices their production at the premium end of the spectrum. Sure you have that $300 notebook, but look at where Apple prices their lowest-end notebook. Someone can get a smart phone for free with contract, look where Apple prices their smart phone with contract. There are tons of iPod-like players- some with MORE capabilities than iPod- but look where Apple prices their iPods. Why will this product break the pattern?
And these people imagining the print industry will subsidize the price, why exactly will they do that? And are you the same people who keep speculating that all this print media is going to be souped up with new features like video, etc AND priced a lot lower since it won't have to be printed and distributed like the print edition? Apple can't "save" the print industry

while getting
them to chip in on the TOTAL price Apple wants for this Tablet, getting
them put in the time & effort to meaningfully enhance their print products for the Tablet AND getting
them to significantly reduce the price they charge for that media, since they don't have to print it on paper for this Tablet.
Realistically, if there is going to be a subsidy for a price "not anywhere near $1000", it's going to be hooked to an optional 3G contract. That way the company paying the difference with you will actually get paid back by you over time.
Having read all I've read, thought about the possibilities, etc. my low-end guess is still at $799 unsubsidized, which, in marketing-speak is "not anywhere near $1000", with pricing as low as around $399 with a 2-year contract with AT&T or Verizon.
This is Apple we're talking about. On what else did they roll out a "next big thing" product and have everyone shocked at how LOW the price was (without a 3G subsidy hooked to it)?