So you were put in charge of making the 060 based amiga

[psxphill]

It must run an 060 processor.

For low end you'd probably have to go for something lower than an 060. Maybe either an 030EC or 040EC.
 
Then:
 
The rumoured aga+ with native chunky pixels.
Add texture mapping to blitter.
Add more sound channels to paula, with proper stereo panning.
Up to 8mb of chip ram.
 
It would be too late by 1996, you'd need to have gotten that out to developers by 1994.

[psxphill]

I would avoid the EC models and offer fully functional CPUs that can handle the ZorroIII bus that you also want to have available.

You wouldn't want that on an A1200/CD32 class machine. I'm not sure I'd have used Zorro3 on a high end machine either, pci was out in 1993.
 
If in 1993 Commodore had launched something equivalent to the PS1 then they would have made serious money. Unfortunately they didn't have the vision or the experience.

[psxphill]

With the exception of the Wii, every single games console since the PS1 (and quite possibly earlier) has been sold at a loss, with the game prices being hiked up to subsidise it.

That may be true for Xbox/Xbox360/PS3, I don't think that is true at all for Nintendo. Sega may have taken a hit on the Saturn, but I doubt they did on the dreamcast. I doubt Sony made a loss on the PS1, it was quite a simple design and they basically owned it all.
 
Although in the first stages of manufacturing, everything does cost a bit more while you're sorting out yields etc. But that would affect every electronic device ever made. It's less of a problem these days, with so many developers that will need consoles before the actual launch.