I think that's where people get mislead.
You don't "emulate" anything in these game devices. You simply miniaturize the original chips into one single smaller chip. It's not a processor pretending to be an Atari, it's the whole Atari (every simgle circuit) inside that one chip. Same goes for the MegaDrive PlayTV - it's not emulating, it's the real deal inside the one chip.
The games are contained in the 2nd chip. That's the only place there is added expense - you need a larger ROM (or NVRAM) for more games or larger games. Everyone here knows how many Amiga games you could fit on a 16MB ROM, all you need to do is make one single processor that contains an entire A500.
intel chips are currently being produced at .09 microns (unless you count the 386 and 486 chips they still make, those are still 0.19 microns). The Amiga 500, for example, used Motorolla 68000's which were 1.5 microns, the Fatter Agnus was 1.4 microns. There's the physical space to take the exact designs of every single Amiga custom chip and supporting chip, and slap them into a single 0.10 micron chip (it would end up being smaller than 1 inch by 1 inch). (The 68000 would fit in a chip 1/1500th the size).
It's apparent that the 68000 already exists in miniature form (MD PlayTV), so the 68000 would be considered a tool-set already at whatever chip manufacturer makes the PlayTV chip. How hard could it be to add the other chips in there with a new chip seeing as how the 68000 is already in a toolset?
You wouldn't need the expandability, you wouldn't need the zorro slot, you wouldn't need all the ports, etc for the first cheap version.
I seriously think it's possible if the original chip plans exist. I also think it wouldn't take too much money to pull off ("only" a million or so to get it ready for production - that's peanuts when you'd sell over a million of the things at $30-$50 each). I think the magic price-point is $29.95 though (anyone will spend up to thrity bucks on a kid's gift - but $49.95 makes you actually evaluate what it is you are buying). Maybe it would cost a bit too much to deliver an amiga game TV pad right now, maybe that's a year or two off still.
It's a fantastic idea though.