The C64 was mostly selling in Europe to run games that mostly required cycle accuracy and illegal opcodes. A 65816 wouldn't be very useful, even the C128 wasn't compatible enough & it was expensive.
Both C= and Amiga were big sellers in Europe.
65816 was compatible enough for Apple.
C128 sold a few millions, I think a nicer 65816 based system could have even sold more. MOS could have had developed a 32 bit CPU in house, freeing C= from shackels of Motorola and their pricing.
Amiga, as nice and as advanced as it was, lost Commodore 3 years of momentum and a lot of money untill A500 took off.
The PC model of backwards compatibility could have been applied on the C= 8(C64) -> 16(C65816) -> 32(6532) bit line. The C64 was the 2nd biggest platform in the 80s, it was foolish not to take advantage of that.