But the 486s were in £1000+ systems, and the A1200 was a £400 (then £300) system.
Which brings us onto the other failing: No £600 A1230 with 40MHz '030 and 4MB RAM at release. Upselling - Commodore hadn't heard of it, apart from that hard drive included SKU.
At Release:
A1200 2MB '020 14MHz: £399
A1200 4MB '020 14MHz: £479
A1200 4MB '030 25MHz: £549
A1200 4MB '030 40MHz: £599
A2200 4MB '030 40MHz: £799 (A1200 in desktop case w/ separate keyboard)
People would have easily been persuaded to get a higher level A1200 in shops because the price increments aren't too shocking.
The real problem IMO was 030 was a weak improvement on 020 but from 286 to 486 Intel made genuine improvements. The A4000/030 was available for £999 but then was both crippled by the bitplane system of 256 colour modes AND the fact for the same money you got an 040 class CPU in the £1000 486 SX25
Textured 3D was coming whether you liked it or not and 3DO/Saturn/Playstation all instantly aged the Jaguar/SNES/Megadrive over night. The 486 PC + byte per pixel VGA screen mode also did the same to the Atari and Commodore computers.
I don't think it was so much a matter of money with AGA as such, although I agree they didn't have the money to do much with anyway, but the problem is they left it really late, A1000,500,2000,1500,3000,600,CDTV all had the same abilities for 320x256 resolution. All of a sudden the sales started dropping off and Commodore needed 256 colour graphics FAST. TIME that's what Commodore didn't have, even if R.J. Mical and Dave Needle still worked for Commodore in 1990 I don't believe there was enough time between A500Plus launch and A1200/4000 launch to actually create a true successor regardless of loss of engineering talent and loss of cash.
I suppose they could have done what Sony did with PS3, essentially put all the custom chips of the previous generation inside the new machine AND add the new more advanced incompatible custom chips. So a sort of firmware based emulation. This would have allowed 0-64 colours as before and only needed a simple 24bit chip for 256,65000 or 24 million colour modes. Very expensive way of doing it though, would probably have added £100 to price of A1200 and at £400 it was too high already with 880kb floppy and only 4 channel sound (easily fixed with a dual Paula motherboard mind).
There is one thing nobody considered, they could have implemented a mini version of the A3000s video slot inside the A1200 too and left the ECS chipset as is. Then all you need to do is buy hundreds of thousands of cheap powerful graphics chips as used in PC cards and put them on a simple videoslot adaptor to give the extra features of 24bit colour.
Essentially this would then be like the Commodore 128, when you switch from different screen modes it used a different chip after power off/on cycle. VDU or VIC-II. Bil Herd and Dave Haynie who designed a lot of the 128 still worked at Commodore at that time so I'm sure that was possible. And probably would have cost less in R&D than making the ECS compatible AGA chipset.