"The SE cannot be so much out of date design wise that it looks completely outclassed by similarly priced but up-to-date designed Android's"You're right, it's a wish, remember the SE started with the 5 / 5S design which was the last small iPhone before the 6, 6+, and forward took to ever larger footprints. Until the Mini that is. In a sense, those of us who preferred smaller, more pocketable phones, saw on the initial SE an attractive alternative.
I understand the idea is exactly not to sell you a current desgin, but, there's a part of your statement were I disagree. The SE cannot be so much out of date design wise that it looks completely outclassed by similarly priced but up-to-date designed Android's. Because there's a point where even if it's an iPhone, with the Apple logo in it and everything, the benefits a modern SoC and the Apple brand might bring, will not make up for a phone that looks from 10 years ago.
IMHO, the tipping point where this design is bringing the whole $399 proposition down has been reached. So maybe time to bring it to iPhone XR design, or as, you mentioned, iPhone 11. Due to the SE being in a 2-3 year update cycle, this means Apple will keep trying to sell you the iPhone 6 design, for $400, well into 2023.
It can, and it does, and sells them in droves. Because it has the lastest iPhone processor, the latest iOS, and a reasonably up to date camera, and that works better than any Android for a lot of people.