See, I'd disagree with your second point. People want to believe that the bike that they are riding is some sort of "pure track machine," that was forcibly yanked from the velodrome and put onto the streets. If anyone knows this, it's the guy from Keirin Culture, who has made a living selling exactly this. It makes more sense for him (and everyone else in the Richmond metropolitan area) to continue to push these as the pure track bike that everyone desires, rather than as trendy, attractive and perhaps lacking in performance.

To your first point, it could certainly be done for $7-800, but at that price point, there are far too many custom options and used frames available to make it a viable business.