I'm "poo pooing" the idea. None of the regulars here would accuse me of wearing Apple-colored glasses.
My opinions have been formed by first-hand experiences with Surface devices, Windows 10 on tablets, and additional experience on many other platforms.
Surface line of products, generally speaking, are not the most reliable. Having experienced serious issues with them (Surface RT, Surface 2, Surface Pro 4, Surface Book), I refuse to buy another Surface. And I've been a big fan of the Surface RT and 2.
Here is why I believe that if such a low-cost device is released, it will not be successful (depending upon one's definition of successful)....
Operating System - Windows is a desktop OS with a lot of enterprise-level functionality. This is not only overkill for the consumer market, but it actually has a negative effect on the user experience. The forced updates of Windows is tolerable for many (not for me) on a desktop, but doesn't work well with a mobile device like a tablet. Microsoft needs to gut out much of those things that don't matter to consumers, like group policies, logging, etc. But they won't ever do that.
The OS footprint grows dramatically over time. There are many low-end notebooks with 32GB storage. Upon first boot up, there's about 20GB free. Apply a few updates and free space can easily drop to 10GB and below. Even using all of the tips and tricks to reduce the footprint, the free space on that system never gets much above 10GB. Who will want to perform that kind of system maintenance on a device that's supposed to be a mobile convenience device? I've owned a few with only 16GB storage, that experience could be characterized as criminally fraudulent.
UI - Microsoft doesn't have a good track record with long-term commitment to a direction they set. The took a step too far with Windows 8. Tweaked it back a bit with 8.1, and another step back with 10. The result is an inconsistent UI that continues to have a mixed look and feel.
Apps - The Modern UI (the UI previously known as Metro) is not well embraced by developers. It makes poor use of screen space causing developers to revert back to the "classic" UI for any app that is non-trivial in function. There aren't enough Modern UI apps to make the tablet experience on the Surface a pleasant one. And blowing up UI elements on the desktop is NOT the same as a UI specifically designed for touch interaction.
The availability of a quantity of quality Modern UI apps has historically been an issue. But I believe the situation worsened with the discontinuing of the Surface 2 and the abandonment of any pretense of it being used as a tablet.
The Surface was never "tablet only" - Microsoft never marketed the Surface as a tablet. There still are no ads (and never have been) for the Surface that DON'T showcase the TouchCover. Yes, the keyboard covers were sold separately, but that was to help advertise a lower MSRP. This point is really a summary of the previous points.
Unattainable pricepoint - It is not going to be possible for Microsoft to meet the price point of the 2018 iPad. They're not a hardware company and they don't have the volume to be able to get rock-bottom prices on components. And because of the requirements of the OS and Microsoft's unwillingness to optimize Windows for such a platform, that means greater hardware requirements.
Competition is good for consumers. Poor competition is not. Microsoft's half-hearted attempt at this (and it WILL be half-hearted) will only embolden Apple to sit on their quite substantial marketshare.