The only thing stopping Apple from selling that base 21.5" non retina is lack of supply of panels or CPUs. While the Kaby Lake desktop CPUs are beginning to get discontinued the mobile CPUs are not, Intel still haven't discontinued mobile CPUs all the way back to Haswell (4th gen).
And that Kaby Lake CPU isn't the only outlier that Apple have used in their based 21.5" model - the late 2015 model used a really poverty spec Broadwell CPU which was on a Thunderbolt 2 motherboard.
I'm guessing they needed to use Thunderbolt 3 when they specced out the 2017 models so went for the Kaby Lake mobile option when the motherboard redesign was forced.
When the time comes for another redesign it might need Thunderbolt 4 to be a thing - its already slated for release with 10nm
Tiger Lake for mobile later this year and
Rocket Lake S next year. It's not going to offer a speed increase over Thunderbolt 3 but it will at least incorporate all manner of new and balkanised USB3 standards that have been recently released.
The other thing that Rocket Lake S will bring will be 20 lanes of PCIe 4.0 (up from 16 on Comet Lake and prior CPUs) - this would enable even faster SSD, and better GPU performance.
Imagine direct connection of RDNA2 GPUs on 8x PCIe 4.0 lanes (equivalent performance to 16x PCIe 3.0 lanes) - and the possibility for a standard iMac to carry 4 Thunderbolt 4 ports in addition.
There wouldn't be too much of a performance penalty if the same RDNA2 card would connect via 4x PCIe 4.0 lanes (same as the current 8 lanes of PCIe 3.0); 4x for the super fast SSD, 8 for 4 Thunderbolt 4 ports via 2 Titan Ridge controllers, and keep an extra 4 lanes back for optional 10Gig Ethernet. That would then cater for pretty much a replacement iMac Pro using Rocket Lake S CPUs.
And imagine the flexibility of a headless Mac (mini) with 4 Thunderbolt 4 ports and an onboard GPU...
Perhaps another reason to stick around for 2021 Macs - and a compelling reason for Apple to tread water this year, especially if they can somehow justify a warmed over Coffee Lake spec or storage bump to keep the iMac ticking over during this exceptionally odd year.