@Glitch:
A far better choice would've been an NEC V20 or NEC V30 chip, as it would've allowed MS-DOS in addition to CP/M, but you have to remember those chips probably cost significantly more than a Zilog Z80A at that time the C= C128 was introduced in January 1985 (according to Wikipedia). C='s choice of a Z80A was a cheaper CPU chip then an 8088, V20, or a V30. The C128 was already more expensive than the C= C64 computer. Price was a big thing back then. Also, don't forget that there was most likely licensing fees for MS-DOS, too, and that would've added to its final cost, as well as the C128 development team needing to get MS-DOS properly interfacing on the C128. Hindsight is always 20/20.
On another note, why don't you install AmigaZ80 from AmiNet instead of testing CP/M on a TRS-80 Model 4P? I uploaded that file to AmiNet.