If this thing is reasonably priced (for Apple) and doesn't have some last minute dealbreaking drawbacks, I thinks it's a genius product.
IMHO this is not a product aimed at someone who wants an all-around Mac. There's the MB Air for that. I think it has a fantastic value for people who already have a competent/powerful Mac (i.e. a MBPRo or a desktop Mac) but want to have something to take around that's light, functional and with a keyboard; and also cheap, in case it gets damaged. In sales terms I think that it will be a win for Apple, because it's not an instead product, but an also one.
I have a 14" MB Pro for work and a Mini at home, and I can perfectly see myself taking this thing with me to give lectures, attend meetings or just go to my relatives home and advance some light work. Just use an iPad for that, you say? Sorry, but I want MacOS and a terminal window. And a proper keyboard.
About performance: If it does have an A18 Pro, that thing will be almost as fast as M4 in single core, and about as fast as M1 in multicore and GPU performance. Doesn't look bad to me for its use case. And there's plenty of M-series machines with 8GB RAM out there, so I don't think that would be very limiting on the short term. If it had 12GB, that would be golden, but regardless.
Ironically, of all the mentioned possible downgrades... I think a non-backlit keyboard would be the most missing feature for me. 🙂