This thread is interesting....I've not read every post....have to do some work...but it suggests some questions...that may be a little off topic .....
1) Is there a market (I think there is a need) for a simple, inexpensive (not cheap) bike?
2) what would it be spec out as and still keep it inexpensive.....my partial spec would be steel frame, rear derailler (get 8 speeds easy) no front derailler, flat bar (easy to put various shifters/brakes on). I would except more weight in frame for better components. No fake springs, suspensions etc.
3) my take on LBS not handling cheap bikes....I think that by buying at a LBS people expect a level of quality is higher than at a boxstore...even if they are paying the same price. This makes keeping customer expectations fulfilled hard. Perhaps if a simpler, better quality bike can fullfill both needs.
What do you think??