The iMac has been the only successful computer in the all-in-one form factor in years. Compaq, HP, Gateway, Sony and Dell have tried repeatedly to have a successful all-in-one, and the products they've offered have been non-starters.
However, at this point you have to wonder if the iMac's success is artificially inflated due to the fact that no other mainstream Apple consumer desktop exists.
For most Mac users who want a desktop, it's the only choice. The Mac Pro is a workstation-class machine and priced accordingly, and the Mac mini is home theater/switcher machine that hasn't been updated in two years.
I don't think the iMac should be discontinued, but I would welcome a xMac mid-tower consumer desktop that uses desktop parts.
$1500 is not a bargain basement price point. They offered the PowerMac for years at that price. Apple could easily offer a Core i7-based mini-tower complete with fancy chassis for that price including their ridiculous 20% margin.
What's a 920 retail for now? $280-ish. It's probably less than they're currently paying for the mobile chip in the $1499 iMac.
Cheaper and faster processors + cheaper and faster motherboard + cheaper and better graphics card = powerful, single processor xMac with a nice profit margin
Sales of matching Apple displays will also probably go up.
The scientists and engineers who need a dual processor workstations will still buy the Mac Pro.
You speak wisdom sir