Sure, but what is the ratio of the size-prioritizing buyers vs. those who look at the price first? I suspect the latter group is way larger, and Apple may want to sell them a reasonably current iPhone, rather than having them go for a used or a refurb that does not earn Apple much, or worse yet, some Android.
So would I, I would pay "Pro"-prices for that. But how many of us are there? The small phone market has virtually disappeared. Sony held out the longest with their Compact-series - the small phone lovers should have flocked to those, but apparently sales were not good enough, as the series got cancelled this year.
I fear we may be a very small group. It would be nice if Apple still provided a 4-inch phone for us, if only as a bit of a courtesy and to keep us in the system - if companies like Fairphone can survive selling less than 100K phones a year, I'm sure Apple would manage not to lose out on a true SE successor. But maybe they think that we will settle for a slightly bigger one eventually, and maybe they are right.
As it stands, I'm not very interested in an 8-based SE2, at least not yet. My current SE will be good enough for another year with iOS13, and by that time we will know more about the rumored 5.4" full-screen iPhone that might have a similar size.
