Well, the counter-argument is that the M1 is what (possibly) allows the iMac to be as thin as it is. I suppose we can argue until the cows come home about whether the iMac really needs to be that slim, but the point is that this is a form factor you will not likely see with existing Intel or AMD chips.
Apple evidently believes that the M1 is more than enough performance for the entry level iMac (considering its target audience) and are electing to either not put in a more powerful chip (or that it just isn't ready at this point). And Apple is probably right.
Which does raise a valid point. When you know that performance suffices for your user base, and additional specs is not going to have a meaningful improvement on the user experience, do you continue cramming in the specs regardless (at the expense of over-serving your market), or go to work on improving other aspects of the iMac, even if they are wholly aesthetic?
What exactly am I losing by having the iMac be as thin as it currently is? We have a thin form factor iMac, without the thermal throttling issues of the past, while still enjoying performance that beats the majority of processors out there in the market? And because Apple is able to optimise the OS for the hardware, you still get a snappier experience (eg: everything feels smoother) even when going up against more powerful i9 chips which should spank it in performance.
Shouldn't people finally be happy that we are now able to have both our cake and eat it too?