I think you’re overlooking that it has the second FPGA chip in there as well as the Micro SD card slot (not to mention a really nice screen). While it will definitely do what a late gen GBA does as far as what it plays, it’s likely to be able to do a whole lot more once people get their hands on it.
They also have to make a profit on the device itself since they don’t sell games. The now standard Analogue pricing of $199 seems reasonable given all that’s offered here.