I'd be more than ok with a 'classic' 4k resolution on the 23 inch iMac. 'Retina.' Classic 4k is close enough. And far exceeds my current late 2012's resolution which is and always has been 'eye pulling.' So a 4k (or above) resolution is going to be a big upgrade and perfect for me.
I wasn't aware they sold a 23.7 inch (nearly 24 inch...) display on Apple's store. When the price differential is nominal between it and the 21 inch (low end tech' tends to flatten over time...) they may server the customer (and still themselves...) better. Apple won't be paying £629 for it. Even the difference between 128 and 256 gig SSDs has flattened to the point where even Apple(!) have offered 256 gig as standard on the Mac Mini.
RX 5600M on the entry 23.7 inch. I have no idea what the RX5600M performs like but it would have to go some to be worst than the Mini's trash iG. AMD's low end GPUs aren't too bad. Better than my NV 680M, I should imagine.

As long as it can drive the 4k display and run hi-def games then you have a nice machine. eg. 4k, 6 core, rx5600M, 256 SSD (and hopefully) 16 gigs of ram? You've got a decent machine for £999.
Apple could drop in nominal spec increases for the iMac. I wouldn't put it past them. But the time is over ripe for something more significant....if not life changing.
I think I'm going to have to make an effort to try and manage your expectations here.
While some of the parts that Apple buy in are commodity parts - like RAM or hard drives - others deserve far more credit for what they really are. Their SSDs are PCIe NVME NAND equivalent in quality to Samsung 970 Pro. Typically street prices of these things are double or higher than the commodity rubbish that I see so many people wheel out here.
They also spend quite a bit of time and money on R&D, materials (all aluminium case, not your plastic or steel rubbish), and build quality which so many people once again undervalue. Yes, they make some questionable decisions in terms of specific parts they pick, case design, and lack of upgradability but on the whole Apple generally don't price gouge. It's just that many people, like yourself, wouldn't choose the parts that Apple do.
Apple screens, while now falling behind the best tech becoming available, are not rubbish TN panels with poor viewing angles and colour reproduction.
Apple don't use 4k TN panel screens that you could buy as a complete monitor for £249. Their panels are brighter, wide colour gamut, HDR ready. They don't need to make a 4k resolution 21.5" screen but they do. Some, equally, will see a 5k 27" panel as overkill for their uses. But bear in mind the small print on these monitors - they support 500 nits brightness, and P3 colour gamut. I'll bet a lot of people won't know what that is until it's pointed out to them.
You simply cannot compare Apple displays with the vast majority of screens out there and with LCD production starting to fall by the wayside it's no surprise that they are looking to make their screens even better and brighter, with less IPS glow, with miniLED tech.
Let's take one for example though:
LU28H750UQUXEN Samsung 4k 28" display with Quantum Dot backlight. Amazon UK sell it for £325. Sounds impressive right?
Until you notice it's aimed at gamers with a TN panel, only 250 nit max brightness, 60Hz refresh (this is a gamer monitor right?), and then you look at the
review which says: "The screen came up short when it comes to gamut coverage, reaching a maximum of 92% sRGB which low for a QDEF-treated module. Color accuracy is dismal with a Delta E average of 3.8, which will require a colorimeter to correct."
The review continues to slam colour accuracy and panel uniformity. That's not to say that people on a budget shouldn't be drawn to it but it's never a panel that Apple would use.
But did you stop looking when you saw 28" 4k for 250 quid?
Monitor purists will start to ask where the MicroLED tech (with the extra local dimming zones) are. If you don't know what local dimming zones are they are I suspect you'll know by the end of the year or early next year - but will any people care if Apple didn't 'force' them to buy that panel?
It's a pity that we can't compare with
Dell's version of the 27" 5k panel. The UP2715K, now discontinued, was so pricey at the time that I recall that people said Apple were basically giving you a Mac with your monitor if you went with the iMac - that's where the moaning about target display mode going missing started. It was and still is because of the custom timing controller.
In terms of the 23.7" LG UltraFine display and I can see the value in it but I might have been more interested in it if I could use it on a PC as well - it relies entirely on a Mac to change settings.
I've already been through the difference between budget rubbish SATA SSD up against Samsung 970 Pro NVME PCIe NAND elsewhere...
And finally, let's be serious about your estimates of how Apple might charge for the spec you wanted. I'm afraid most of your prices are out by a factor of almost 2 by my predictions. That's just the way it is.